
Class _2l5:ka_ 

Book ^/^l 

fopyiightls^ 



(ajPHyGHT DEPOSIT. 



SIMPLE 
FARM ACCOUNTS 



A TEXT BOOK AND GUIDE 

BY 

REX E WILLARD, B. S. 

FARM ECONOMIST 

Department of Farm Management 

Agricultural College. 

North Dakota 




Published by the Author 
Fargo, N. D. 






Copyright. 1922 

by 
REX E. WILLARD 



Price, $1.75 



FEB 14 1922 



PREFACE 



This book has been prepared to meet the demands of practical thinking 
farmers and also to be used as a textbook in rural schools. It is hoped that 
the results of its study will be the basis of more profitable farming. It is 
desired to make it possible for both young and old to meet practical farm 
operation in an easy and businesslike way. Further, the book will show thu 
simplest recognized method of record-keeping for farms for the purpose of 
studying the farm business and also for the purpose of making income tax 
returns. The second part of the book shows the forms used, and illustrative 
entries from an actual farm are presented. 

Separate account books, following the outline here presented, may l)e 
secured from the Exension Division of the Agricultural College of North Da- 
kota, in which the record of the business of any ordinary farm may be kept. 



SIMPLE FARM ACCOUNTS 



TABLE OF CONTENTS 

Preface 3 

Introduction 7 

PART ONE. 

I — Definition of Terms 9 

II — Classification of Accounts 13 

III — Capital Investments 15 

IV — Expenses 17 

V — Receipts 24 

VI — Summaries 27 

VII — Measures of Efficiency 30 

PART TWO. 

II lustrated Accounts 33 

The Farm Plat 31 

Acreage and Yield of Cro]is 36 

Crop Sales 38 

Cattle Purchases and Sales 4D 

Hog Purchases and Sales 40 

Dairy Product Sales 41! 

liorse Purchases and Sales 44 

■^iheep Purchases and Sales 44 

Poultry Purchases and Sales 46 

Egg Sales __ 46 

Miscellaneous Receipts 4S 

Expenses for Feed Bought 50 

Expenses for Hired Labor 52 

Family Labor 54 

Expenses for Machinery 56 

Expenses for Tractor oS 

Expenses for Automobile 58 

Threshing Account 60 

Expenses for Groceries 62 

Value of Food. Fuel and House Rent 64 

Permanent Improvements and Repairs.. 66 

Miscellaneous Farm Expensei 68 

Bills Payable 70 

Bills Receivable 70 

Household Expenditures and Personal Account 72 

Depreciation Account of Buildings 74 

Depreciation Account of Farm Machinery 76 



6 SIMPLE FARM ACCOUNTS 

Inventory of Seed, Feed and Supplies 78 

[nventory of Cattle oU 

Inventory of Horses ^0 

Inventory of Hogs ^2 

Inventory of Sheep 82 

Inventory of Poultry S2 

Income Tax Summary (Accrual Basis) "^5 

Income Tax Summary (Cash Receipts and Disbursements Basis) ss 

Study of the Farm Business ^1 

Some Measures of Farm Business 94 

Teachers' Supplement 98 

Index 103 



INTRODUCTION 



The average farm business is not large enough to justify the employment 
of a bookkeeper. Nevertheless, on acfount of the fact that farm lousiness is 
more complicated than almost any other, the necessity for records is very great. 
Nearly every business maintains complete records of its transactions in order 
that the relation of various items of expense to the income may be studied and 
any leaks or unprofitable operations may be stopped. Certain enterprises 

within the business may show decided profits or excessive losses over a 
considerable period of time and therefore it may ])e desirable to increase or 
decrease such enterprises. 

Again, the relation of the combination of enterprises of any business must 
be fully known for it frequently happens that one or more parts of the business 
may be unprofital)le while at the same time if these were discontinued even a 
greater loss to the entire business would be sustained. This is Illustrated in 
some farming communities where dairying is conducted, A cost account 
study of the dairy industry sometimes shows a loss while the entire farm is 
operated more profitabl.v with dairying included in the business than when it 
is left out. This is often due to better use of labor over the whole year which 
is required whether dairying is conducted or not. 

The present organized effort on the part of the farmers of the United 
States to improve tlieir position in business makes it necessary that every 
farmer know his own business, not in terms of estimates or general experience, 
but by cold facts which are matters of record. It is unthinkable tliat an 
industry that occupies the attention of one-third of our population shall continue 
to be handicapped by lack of definite information about the l)usiness, as has 
been the case in nearly every instance when farmers have appeared before 
various governmental or other commissions in tlieir own interest, Tlie be- 
ginning of improvement in any business must be made in the study of the 
business itself. 

The time is here when the rights of the public are being considered in 
matters of production and distribution of products and it is time that the 
consumers of farm products are made aware of the economic and social condi- 
tions of the agricultural producers. What are their standards of living? How 
may these conditions be improved to become comparable with those of their 
city neighbors? 

Some farmers cannot and others will not keep records of even the simplest 
kind. Others feel that they have not the time or are too tired at the end 
of the day to spend two or three minutes recording their business transactions. 
Those farmers who have tried to keep a record of their business in any kind of 
systematic way almost universally agree tliat they ai-e able to make l)ig' 
improvements and savings by the use of their records. 



S SIMPLE FARM ACCOUNTS 

The necessity of making income tax returns has compelled many farmers 
to begin record-keeping and there men find that they are making considerable 
saving in payment of taxes by the use of records: this is due to the fact thai 
most farm sales are in larger quantities and are therefore not easily for- 
gotten when no record is kept, while a large number of expenses are individu- 
ally small and are easily forgotten unless record of them is made. 

Many farmers feel that they know whether they have made a profit or 
loss during any year by their bank statements. This is not a true measure 
of profit or loss because there are often many items of expense that do not 
pertain to the farm, such as doctor's bills, expenses for pleasure trips, etc., 
which are paid from the same bank account. Further, there are often pay- 
ments for various permanent improvements such as buildings, machinery and 
others, which are really not expenses but are capital investment. Keeping 
account of expenses by the use of check stubs is a step in the right direction 
but it is seldom that farmers summarize the year's business from them and 
determine actual profits or losses. 

Any system of accounting that does not take into consideration quantities 
■and values of material on hand at the beginning and end of the year (inventories) 
does not give a true measure of profit or loss. This is illustrated by the 
experience of the North Dakota farmer who calculated his income for 1920 
in two ways, one by the use of inventories and the other by the "cash" method. 
By the former method he made a profit of $720.00 and by the latter, using the 
same year's business records, he made a profit of $2180. The decrease in 
prices during the year caused a big loss in value of material on hand at the 
end as compared to that at the beginning of the year, amounting to over 
$1,500.00. 

The man who learns to study and analyze his business today is the 
prosperous producer of tomorrow. 



SIMPLE FARM ACCOUNTS 



PART ONE 
CHAPTER I. 

DEFINITION OF TERMS. 

It should be clearly understood just what concrete accounting results are 
to be obtained in farm record-keeping. The first and perhaiJS the less im- 
portant result is the summary for purposes of income tax reporting. The 
second is the necessary information for the study of the business itself in order 
to make improvements. 

Income lax reports are made from the standpoint of the individual; that 
is. the net farm profit is the return for the use of capital and labor of the oper- 
ator. The individual is the head of the family and manager of the business. The 
members of the family are dependents of the individual head and as such all 
the income of the dependents is his income. Thus, if wages are paid to mem- 
bers of the family who are dependents it is like taking money from one pocket 
and placing it in the other; therefore, the value of labor of the family and of 
the operator himself is not a deductalile expense for income tax reporting. The 
same is true with respect to interest on investment and some other items. 

On the other hand the net income of the farm as a business is determined 
from the standpoint of the investment and all values entering into its operation 
are considered as expenses whether paid for in cash or not. So far as crop or 
livestock production is concerned it makes no difference whether labor or 
other bills are paid or not; the values enter into the operation. 

Thus, a study of the business with a view of making changes and im- 
l)rovements involves not only record of such transactions as are necessary for 
income tax reporting but also a number of other items. In the discussion of 
the various accounts the classification is indicated with respect to these two 
purposes. 

For the purpose of making clear the matter which follows, certain terms 
of quite common occurrence are here defined in alphabetical order: — 

Accrual Basis of Reporting. (See Income Tax, page 10). 

Appreciation. This term is used in expressing gain in value due to growth 
or development. Young stock, such as colts or calves appreciate as they 
grow to maturity, i. e., to the age at which they are prime or highest in value. 
Appreciation as here used does not refer to gain in value due to advances in 
market prices. 

Capital Investments. Expenditures made for permanent improvements 
are capital investments. Any payment made which merely changes the form 
of the investment is still capital. The purchase price of an animal or the 
cost of erecting a new barn represents capita] investment. 

Crop Acres per Horse. This is a measure of efficiency of operation. 



10 SIMPLE FARM ACCOUNTS 

When the total number of acres in crops on a farm is divided Dy the number 
of actual work horses (or equivalent if tractor is used) the result is "crop acres 
per horse". It is the equivalent in terms of labor per acre of the amount 
of work that one horse does in one year. 

Depreciation. This term represents the loss in value due to use of an 
article or due to age beyond the maximum or prime value. A horse appreciates 
until it is about six years of age when it begins to depreciate. A building 
begins to depreciate at once following its construction. 

Enterprise. This term is used to designate one part or division of the 
farm business, such as the production of wheat, corn, cattle, or hogs, etc. 

Family Labor. The work on the farm done by members of the oper- 
ator's family is called family labor and may or may not be paid for in cash. 
A sixteen-year-old son of a farmer may work on the farm and receive payment 
therefor; this is family labor and it cannot be included in the labor account for 
income tax reporting, but is included for studying the farm business. 

Farm Operator or Operator. The individual that manages the farm is 
called the operator. He may be either man or woman, owner or tenant. 

Farm Price Method of Valuation. This is the process of determining the 
value of any article or commodity on the basis of its worth on the farm. For 
certain things this is the market price less the cost of delivering to market. 
The price of wheat at the elevator may be $1.50 per bushel; if It costs two 
cents to deliver a bushel of wheat to the elevator and sell it, the farm price 
is $1.48. 

Farmstead. That part of the farm area on which the buildings stand 
and the intervening space between them is the farmstead. It usually includes 
also the garden plot, small lots and sometimes windbreaks. 

Groceries. As herein used the term, groceries, refers to that portion of 
the food used on the table which is bought for cash or is received in trade. 
It does not include cooking utensils, or food furnished by the farm or garden 
for table use. 

Gross Profits. This term is used in making income tax returns and 
when the report is made on the accrual basis gross profits are determined as 
follows;— from the sum of the value of the crops, livestock, etc., on hand 
at the end of year, and all sales of crops, livestock, etc., is subtracted 
the sum of the value of the livestock, crops, etc., on hand at the be- 
ginning of the year, and the purchases of livestock, crops, etc., during the year; 
the result is gross profits. When income tax reports are made on the "cash" 
basis, gross profits are the difference between purchases and sales of livestock, 
crops, etc. 

Horse Labor. This term is used to represent the work done l)y horses 
or mules. Cost of Horse Labor is found by determining the entire cost of 
keeping work horses for one year. 

Income Tax. This is a tax collected by government which is based on 
the net income of the individual, but this does not necessarily correspond to 



SIMPLE FARM ACCOUNTS 11 

the net income from the farm. As the head of the family the individual 
operator is considered to receive all of the income of his dependents for income 
tax purposes. Thus it is that value of family labor, for instance, is not allow- 
able as expense for this purpose. Accrual basis of reporting income tax includes 
not only receipts and expenses and depreciation but also inventories of proper- 
ty at the beginning and end of the year. The Cash Receipts and Disbursements 
method of making income tax returns includes only cash receipts, expenses 
and a certain amount of depreciation l)nt does not consider inventories in any 
form. 

Inventory. The invoice or list of property on hand is called the 
inventory; an inventory should be taken at the beginning and at the end of 
each business year. The inventory at the end of the year is the inventory 
for the beginning of the following year. 

Interest on Investment. The percentage income on the capital invested 
in the l)usiness is the interest on the investment, and is found by dividing the 
net earnings of the business by the amount of the value of the land, buildings, 
equipment, livestock and other persona] property used in the business. 

Labor Earnings of the Operator. This is the amount which the farm 
operator receives for his year's work after deducting all values entering into 
produ(;tion and interest on investment. This is sometimes called "labor 
income." 

Management. Every successful business requires supervision and this 
is generally called management. The value of management is properly an 
expense in determining interest made on the investment. It is not a proper 
charge, however, for income tax reporting. This charge varies from about 
$200 per year on small farms to more than $2500 per year on some large farms. 

Man Labor. All farm work done l)y human hands, including that of men, 
women and children, is called man labor. 

Net Farm Profit for income tax reporting, is the profit of the individual 
oi)erator, no deductions having l)een made for the value of his own labor, 
living expenses, interest on investment and some other items. 

Nurse Crop. When two crops are planted on the same land and no 
return is expected from one of them until after the year of planting, the other 
is called a nurse crop. Where sweet clover and wheat are planted together, 
wheat is the nurse crop. 

Overhead Expense. Those costs which apply to the general up-keep 
of the farm are called overhead expenses. They are not applied directly to 
productive enterprises. Such cash items as telephone rent, interest on 
borrowed money, expenses for trips In the interest of the farm business, etc., 
are in this class. These are proper items to appear in the records for income 
tax reporting. There are many items of overhead expense on the farm which 
are not paid for directly in cash, such as those for general repair, etc. 



12 SIMPLE FARM ACCOUNTS 

Permanent Improvements. Those items of investment which increase 

the vahie of the property or extend tlie period of its nsefniness materially 
are permanent improvements as distinguished from repairs. The latter merely 
maintain tjie property in ordinary condition. A new concrete floor in a 

barn is permanent improvement while fixing a door which has been broken is 
repair. There are some kinds of expenditures, however, which are near the 
border-line between repairs and permanent improvements; in such cases it is 
necessary for the accountant to use his best honest judgment as to which is 
repair and which is permanent improvement. 

Receipts per Cow. When the total income from cattle is divided by the 
number of mature cows the result is receipts per cow. The increase in valu-:; 
due to the growth of young stock together with the receipts from the sale 
of stock and various products comprise the total income from the cattle. 

Size of Business. The size of a farm may be measured by the number of 
acres in crops where the amount of stock is small. Where the farm is 
diversified in character, i. e., where there are several enterprises such as wheat, 
' potatoes, and different classes of stock, the amount of labor required to operate 
the farm is a more accurate measure of size. Where possible to determine 
it the total expense of operation is a good measure. A farm that produces 
wheat, potatoes, hogs and cattle is larger than one producing grain only, even 
though the total farm acreage may be the same. 

Taxable Year. For the purpose of income tax reporting the taxable 
year is a period of twelve months. It is usually from January 1 to December 
31, although, if there is any particular reason for a different period of twelve 
months, any farmer may keep his record accordingly. After once establishing 
a taxable year between certain dates the farm operator should not change to 
another period. 



SIMPLE FARM ACCOUNTS i;-) 

CHAPTER 11. 

CLASSIFICATION OF ACCOUNTS. 

The system of farm accounts herein described is entirely of a single 
entry form; each entry is made once and once only. No posting is required. 
Each of the accounts commonly used is labeled with a thuml) Uv.]ex in the 
separate account book herein recommen.ded so that each account can l)e easily 
found. 

The only transfer of figures required is in carrying the totals of the various 
accounts to the proper places in the summaries. Each of the summaries 
shows the page-and column-number from which each total is transferred. It 
only requires that the directions be followed for the successful l;ee- ing of the 
records of the ordinary farm. 

The various accounts essential for determining the facts concerning the 
farm business may be grouped under five general headings as follows: — 

1. Capita! Investments. 

2. Expenses 

3. Receipts. 

4. Summaries. 

5. Measures of Efficiency. 

Capital Investments. These may be divided into two general classes, 
namely, real estate and personal property. The first of these comprises land 
and everything of a permanent character, that stands upon it. including build- 
ings, timber, windmills, etc. Personal property includes all of the rortable 
equipment, livestock, etc., used in farm operation. In detail, personal property 
includes the following: — cash required for operation; grain, seed, feed and 
supplies on hand; horses (or mules); cattle; hogs; sheep; poultry; machinery: 
harness and other loose equipment. 

Expenses. These are divided into various accounts in conformity with 
income tax regulations and to meet the convenience of the farmer in record- 
ing the various items. Among the expense accounts are the following: feed 
bought; hired labor; family labor; machinery expense: tractor account; 
automobile account; groceries; value of food furnished by the farm; building 
repairs; household and personal expenses and miscellaneous farm expenses. 

Receipts are classified in a similar manner to expenses, the following 
being included: — crop sales; dairy sales; egg sales; miscellaneous receipts. 

For convenience in recording, certain items of purchase and sale are in- 
cluded in the same account, among them being those for cattle, hogs, horses, 
sheep and poultry. 

Summaries are the accounts to which the totals of the various detailed 
records are forwarded for different purposes. The forms for income tax 
reporting (pages 87 and 89) are one each for the accrual liasis and cash 



14 SIMPLE FARM ACCOUNTS 

receipts and disbursements' basis of reporting. One summary form (page 
93) is for calculating the farm profits from an investment or production 
standpoint. 

Measures of Efficiency are certain standards of operation by whicli metliods. 
and practices on one farm may be compared with the same methods and 
practices on another. Some standards or measures for approximately average 
farms of the northwest are indicated (page 97) with which any farmer may 
compare his own methods and determine his efficiency in comparison with, 
others. 



SIMPLE FARM ACC^OUNTS 15 

CHAPTER III. 

CAPITAL INVESTMENTS. 

Real Estate is usually the largest Item of farm investment. For the 
purpose of determining the total investment (page iio) the value of the 
buildings must be included with the land value. The value of the farm is 
established on the basis of current selling prices of property of similar 
character. Among the conditions entering into a determination of farm 
property values may be included the foUov^ing: — character or buildings; quality 
of the soil; distance from market; drainage conditions; crop or tillable land; 
amount of waste or unproductive land; amount and value of timber; water 
supi)ly; convenient arrangement of buildings, etc. 

The various classes of land such as pasture, waste, (including roads), 
farmstead, area in crops, etc., are recorded; this generally gives an excellent 
iiasis for determining actual value of the farm. 

A considerable variety of improvements other than buildings may be 
added to the farm from year to year, such as the planting of trees, construction 
of fences, ditches, etc., which are permanent improvements in that they in- 
crease the value of the farm. Therefore, such items are not charged as ex- 
I-enses but as new improvements. 

Personal Property. On most farms a certain amount of money is 
necessary to carry on the business throughout the year. This is a part of 
the capital required to operate. In case of dairy farms it generally happens 
that the current income from the sale of dairy products is immediately put 
hack into operating expenses: under such conditions there may not be anv 
"cash requ-ired to operate" in the capital investment. When money is 

borrowed during the year it is recorded under bills payable; the interest on 
siuh funds is chargeable as expense. 

The value of the feed, seed and other supplies (ui hand at the beginning 
of the year represents capital investment. These may l)e consumed during the 
year but at the end there is usually about the same amount of material on 
hand to be carried into the following year. There may be an increase or 
decrease in value of the same amount of any commodity; in such cases the 
difference is automatically accounted for when the summaries are made up at 
the end of the year. 

In arriving at the quantity of material on hand it is not necessary that 

.i;rain, feed or other material be measured. The capacity of bins can be 

estimated or calculated very accurately by the farmer; hay or other roughage in 

the stack or silo can likewise be very closely estimated. Values are based 

• on farm price (see page 10). 

All of the livestock on the farm represents personal property. Each 
class of stock is invoiced separately in order that gain or loss on each enter- 
prise may be approximated. 



16 SIMPLE FARM ACCOUNTS 

Values of all stock for slaughter on the farm or on the market are de 
termined on the basis of farm price. Such stock includes all meat-producing 
animals which have no special breeding value. It is highly desirable that 
scales be provided for weighing, but if not available, the farmer's estimate 
of weight will be very close to correct. 

Work horses are valued on the basis of their worth for farm work when 
they are at prime age if such horses are raised on the farm. If bought they 
are invoiced at cost less depreciation since purchase. If they are valued on 
the basis of current market prices their value fluctuates with the market and 
it is then difficult to determine depreciation with accuracy. Horses are usually 
kept on the farm for the purpose of doing farm work and not for trading. If 
kept for trading purposes they are then valued on the basis of market price 
and no depreciation is allowed on them. 

Pure bred breeding stock usually has a value above the block or slaughter 
price and such animals are valued on the basis of breeding qualities and de- 
preciation is allowable on the value represented by the difference between 
block and breeding price. 

Machinery represents a considerable part of the personal property re- 
quired for farm operation; few farmers realize the value of this capital in- 
vestment until they have made an actual inventory of it. New machinery or 
second-hand machinery is recorded at the buying price and this valuation is 
not changed from year to year; that is, the value of machinery on the farm 
does not follow market prices. Depreciation must be determined on the 
basis of the cost and not on some higher or lower value that was not actually 
paid. 

Illustrations of the various capital investment accounts are found in Part 
Two. 



SIMPLE FARM ACCOUNTS 17 

CHAPTER IV. 

EXPENSES. 

As previously indicated certain of the expense accounts are 
used for income tax reporting and these do not include the entire list of ac- 
counts required to determine profits from the standpoint of the farm as 
distinguished from those of the operator as an individual. Those accounts 
used for income tax determination are first considered. 

Feed Bought. In this account (page 51) are recorded all expense? 
for feed purchased for any and all classes of stock. If any material is 
traded for any kind of feed it is recorded as a sale in the proper account and 
the feed received is recorded as expense in this account. 

Hired Labor. All labor employed (page 53) which is not family labor 
or operator's labor and which is paid for in cash or materia! of value is 
accounted for under hired labor. Only the direct payment for the labor is 
recorded at the time of settlement with the help; cost of board is calculated 
from the grocery account (page 63) at the end of the year and the amount 
chargeable to hired help is then included in the account. A bonus paid to 
hired men above regular wages in consideration for finishing the season's work, 
is labor expense and is recorded with the regular wage entries. 

Occasionally hired help is required in the house on account of extra 
work in boarding hired men. Such expense properly belongs in this account. 
However, when hired help is required in the house to serve the family, this is 
not a farm expense but a household matter that is recorded in the household 
account (page 73). 

Machinery Expense. Payments for repairs or parts for machines sliould 
not be confused with new machinery. Repairs for ordinary up-keep or re- 
placement after accidental lireaks are expenses and not capital investments. 
Any addition to machinery which materially extends its usual 
lifetime beyond its original period of expected usefulness, however, is a 
permanent improvement, and is classed as new machinery. For example 
the estimated period of usefulness or life of a binder may be eight years. Can- 
vases may last for only two years and must then be replaced; such replace- 
ments constitute expenses for repairs since they do not extend the life of the 
machine. On the other hand a wagon may have Ijeen used for twenty years and 
certain parts are almost as good as wiien new; if the original estimated life 
of the wagon was twenty-five years and certain badly w'orn parts such as 
tires, boxings, etc., are replaced, extending the life of the wagon to thirty - 
five years, such items are "new machinery" or capital investments, sometimes 
called permanent improvements. 

Tractor Expense. While the tractor is a part of the machinery equip- 
ment of the farm many farmers desire to know the cost of operation of this 
machine separate from the other equipment and therefore a separate account 
is provided for it. Any expense in connection with repairing the machine 



18 SIMPLE P\A.RM ACCOUNTS 

(except labor) as well as fuel, oil, etc., are recorded in this account. Because 
of tax regulations items such as gasoline and oil are considered as supplier 
and the account is so arranged that these are entered separately from repairs. 
Cost of labor for tractor operation properly belongs in the hired labor account. 
When it is desired to determine the annual cost of tractor operation, the 
depreciation of the machine (page 77) and the interest on the value at 
the beginning of the year are added to the footings of the tractor account; to 
this sum is added the labor cost of operation and the result is the annual cost. 

ALtomobile Expense. It is necessary to know the cost of autoniol)ile 
operation distinct from the cost of operating the other machinery of the farm 
because it is usually used partly for farm business and parily for pleasure. 
The entire expense must be divided in proportion to these uses at the end 
of the year. Fuel and oil are recorded separately from repairs in a similar 
manner as in the tractor account. 

It is not practicable for the average farmer to maintain a daily record 
of the use of his car and consequently, at the end of the year the operator 
must make an honest estimate of the use that was for farm business and that 
was for pleasure purposes; the proportion of the total repairs that was for 
farm business is then transferred to the machinery account and the same 
proportion of the fuel and oil is transferred to the account for miscellaneous 
expenses. 

It makes no difference as to the make or price* of a car; if used in farm 
business the cost of this use is chargeable in the proper place. Some farmers 
keep more than one car, one for business and one for pleasure. Then the 
entire cost of operation of the "farm" car is an allowable expense in itself 
and this should be kert separate from the expense of the car for pleasure pur- 
poses. Expenses for pleasure purposes are charageable in the household and 
personal account under "incidentals" (page 73). 

Building Repairs. Most systems of accounting allow for the usual up- 
keep of the plant. That is, the repairs and replacements are made as required 
to maintain the property in its usual state of usefulness r-.nd these repairs 
are recorded as expenses. When the annual repair bill becomes greater than 
the amount of the annual depreciation (page 75) the plant may be torn 
down and entirely replaced. A building may be estimated to last twenty- 
five years with ordinary care and use. Such replacements as will maintain 
the building for this period are repairs. On the other hantT, such additions 
to a building as a concrete floor may not extend the estimated life of the 
building but materially increases the Talue of the building; such additions are 
capital investments rather than repairs. Such items as painting, replacing 
broken windows, doors, etc., are repairs (page 67). 

Threshing Account. When a farmer owns a threshing rig and does 
considerable custom work outside his own farm it is desirable that the expense 
of operation be recorded separately from the general farm expenses (page 61). 
It is not desirable to do this if only a small amount of outside threshing is done. 



SIMPLE FARM ACCOUNTS 19 

Where a separate account is maintained, all expenses for labor, repairs, 
fuel, board for the men, etc.. for all threshing are recorded in this account, 
and these items are not then entered in other accounts of the farm record. 
At the end of the season the total threshing expense is transferred to the ac- 
count of miscellaneous expenses. 

If it is desired to determine the cost of threshing for the season, an 
estimate is made of the cost of horse labor furnished by the operator; the 
value of management and other labor not paid for in cash is estimated; the 
annual depreciation of the separator is found in the depreciation account 
(page 771; that portion of the depreciation of the engine chargeable to 
threshing is estimated; any other expenses not paid directly in cash are 
estimated; the addition of these items to the total of the threshing account 
make up the total cost of threshing for the season. 

The annual threshing cost indicated in the above paragraph is not included 
in the income tax report, only the cash expenses and receipts being allowed. 

Groceries. Only that part of the food used on the table that is 

purchased and is consumed by farm labor during the time that such labor is 
actually performing farm work is chargeable as expense for income tax report- 
ing. In order that the cost of such groceries can be determined with reason- 
able accuracy it is necessary to maintain a complete record of groceries bought 
for the tal)le for the entire year and this must be separate from the account 
for "food furnished by the farm." 

It is desirable that the housewife record in the grocery account the 
number of persons boarded at the end of each month. Each child under seven 
years of age is considered as one half adult. At the end of the year the 
number of persons boarded each month is added for the twelve months. The 
total of the grocery account divided by the total number of persons boarded 
each month gives the cost of board per month per person. 

By reference to the labor accounts the total number of months of farm 
work is found. The cost of board per person per month multiplied by the 
number of months of work gives the amount of grocery cost chargeable as 
expense for income tax reporting. This amount is included at the close of 
the hired labor account (page 53). 

Miscellaneous Expenses. In this account a wide variety of items are 

included some of which might be classified into separate accounts; however, 
en account of the requirements of the authorities with respect to income tax 
reports the account is presented in this form (page 69). 

Any expenses which are directly .apnlied to the business that have not 
been otherwise provided for are included here. Among them are: — taxes on 
farm property; interest on Ijorrowed money for farm business; interest on farm 
mortgage; supplies, such as gas, oil, twine, seed, etc.; thresh bill; cash rent; 
membership in strictly farmers' organizations; subscription to farm papers and 
some others. 

Of the supplies above-mentioned, gas and oil have been considered previ- 



20 SIMPLE FARM ACCOUNTS 

oiisly which are used for tractor and automol)ile operation. The totals of 
these supplies (gas, oil, etc) must be transferred to this miscellaneous account 
at the end of the year. Fuel of this character that is used for the operation 
of small gas engines en the farm is recorded in this account directly. 

Depreciation of Buildings. Land in itself does not constitute a farm; 
the necessary buildings for housing stock as well as otner improvements are 
essential. The land is permanent and when proper systems of farming are 
conducted the fertility is nearly if not quite maintained. Buildings "wear 
out" with time and use; capital is invested in the buildings and unless some 
charge is made against the business each year for replacement, eveiitually the 
original capital investment in the buildings will be exhausted. Consequently 
the depreciation of buildings is an allowable expense of operation in order that 
the investment may I)e maintained. 

There is no known method of determining depreciation in a precise way 
because it cannot be determined in advance exactly how long any building will 
last. The best that can be done is to make an honest estimate of the 
number of years that a building will last, based on actual experience. The 
estimated period of usefulness being determined, the original investment is 
charged off in equal parts over the entire period so that each year there is a 
certain amount of expense not paid in cash but which, nevertheless, was paid 
at some time. 

The following illustration shows the method of calculation of depreciation: — 
Mr. A. built a barn in 191.5, costing $1,000. The building was of such character 
that Mr. A. estimated the barn would last twenty years with ordinary care 
and use. If the original cost is distributed over the twenty years, the rate 
of depreciation (1.00 divided by 20) is five per cent; five per cent, of $1,000.00 
is $50.00 which is an annual expense for each of the estimated 20 years. The 
amount of depreciation sustained up to the present (1921) is $250.00 or $50.00 for 
each of the years 1916-20 and $50.00 is the allowable amount for 1921. If it is 
desired to find the value of Mr. A's barn at the end of 1921, by deducting the 
depreciation, $300.00, from the original cost, the result is $700.00. 

Frequently permanent additions are made to buildings which either extend 
their period of usefulness or increase their value by an amount beyond that 
originally contemplated as ordinary up-keep. In that case it is usually desir- 
able to revise the estimate of the period of usefulness and base the depreciation 
on the newly established value, due allowance being made for depreciation 
sustained previous to the year of the improvements. Frequently it happens 
that an incorrect estimate is made originally on the period of usefulness of a 
building; toward the end of the estimated period a new estimate may be made 
and depreciation charged on another valuation, due allowance being made for 
depreciation to the date of the change as originally estimated. The new rate 
of depreciation will of course apply to the revised or second valuation. After 
the original cost of a building has been charged off as depreciation no further 
allowance can be made. 



SIMPLE FARM ACCOUNTS 21 

No depreciation on a farmer's own dwelling is allowable as an expense 
for income tax reporting. While the dwelling is a part of the farm invest- 
ment the farmer is placed in the same class as all other business men who 
are not allowed depreciation on their homes. This is one of the items for 
which the fixed exemptions of $1,000 for single men and $2, .500* for married 
men, are allowed. 

Dei^reoiation of Machinery. The same principles underlie the calcula- 
tion of dei.reciation of machinery as of buildings. Each implement is con- 
sidered separately; an estimate of the probable period of usefulness is made- 
equal amounts are then charged off each year until the original cost is entire- 
ly accounted for in depreciation. 

There is a wide variety of small tools on which depreciation is not 
usually charged, but their purchase price is recorded as a direct expense at 
the time of purchase. Among these are shovels, forks, hoes, hammers, saws, 
small blacksmith tools, etc. While this is not technically correct, it is usually 
the case that many of these are lost, broken, stolen or otherwise disposed of 
at about the same rate each year and the replacements usually maintain them, 
collectively, at approximately the original value. This method is followed in 
order to do away with as much detail as possible in the record-keeping. 

o 

The following accounts do not enter into the records for income tax pur- 
poses, but are necessary if the fa:m operator wishes to know what his farm 
is really returning. A considerable part of the family living is produced on 
the farm. Members of the family are employed on the farm. The returns 
from the farm pay for recreation, doctors' bills, etc. The value of the opera- 
tor's own time in actual wo;k and management enters into the cost of 
operation. 

Family Labor. On nearly every farm members of the family usually 
perform some part of the farm work and usually they are not paid directly 
in cash for these services rendered. Such work, nevertheless, has a real 
value and is so considered in the cost of operation. Almost invariably during 
the seeding and harvest seasons the boys above ten years of age work in the 
field and frequently perform work equivafent to that of regular hired men. 
If the boys did not do this the necessary labor would have to be hired. Further, 
the boys and girls usually assist with the chores, in taking care of the various 
classes of livestock, etc. Almost invariably the housewife looks after the 
poultry and if dairying is conducted she has many duties that are farm 
wo:k directly as distinct from household work. 

It is generally a job of too much detail for the farm operator to keep 

record of the many details of the work done by the members of the family but 

the estimated value of this work should be recorded monthly or at the very 

• longest at the end of the year in terms of value of hired help saved. Many 

farmers feel that they are succeeding because there is a balance in the bank 

*1921 Law. 



22 SIMPLE FARM ACCOUNTS 

at the end of the year when, as a matter of fact, if all labor applied to the farm 
is accounted for at current rates a considerable loss is sustained. 

Operator's Labor. In determining the profits from farm operation 
the value of the work done by the operator and of his management are import- 
ant considerations. The farmer might act as manager on another farm and he 
would receive a salary therefor. Or it might be neccessary to employ a man 
to take the place of the farm operator, so far as possible, in which case a 
direct expense for hired labor is incurred. The charge to be made for this 
item depends upon a variety of considerations, amonp them Tjeing size and 
type of farm as well as the efficiency of the operator himself. The best 
basis for determining this charge is, perpaps, a knowledge of what farm 
managers generally receive on a salary basis. Variation from $200 to $2,500 
per year has been noted, with many farmers placing the charge at $1,000 to 
$1,200 per year (1920). 

Bills Payable. This account does not enter into any or the summaries 
but is included for the convenience of the farm operator. Memory cannot 
always be depended upon, especially with respect to the smaller items. Per- 
haps most farmers depend upon bills to remind them when payments are 
due but these often do not arrive until a few days previous to the due date 
in which case it is often inconvenient or impossible to arrange for payment 
in the short time. 

When a bill is paid it becomes an expense and is then entered in the 
proper account. 

Record is made not only of the amount of l)ills payable but also to 
whom due and when; date of payment should always be recorded. In case of 
dispute such a record will be accepted in courts of law against verbal testimony 
based on memory only. 

Household and Personal Account. This record should be kept by the 
housewife because she is usually more familiar with the various items. None 
of the items in this account appears in the income tax records. As previously 
stated the household should have the same relationship to the farm business 
as has the household of any other business man to his business. 

A wide variety of items are recorded here. Clothing bought for various 
members of the family are personal expenses. All manner of household 
furnishings such as farnlture, bedding, stoves, pianos, dishes, cooking utensils, 
etc., properly belong in this account. A proportionate part of the cost of 
operating a light plant, based upon the relative amount of use that is made 
of it by the household and by the farm, is chargeable here. 

Various kinds of fuel bought are recorded in this account, but any wood 
or other fuel that is furnished by the farm is recorded in the account for 
"food, fuel and house rent." Donations to church and charitable institutions as 
well as expenses for recreation, subscriptions to daily or other newpapers 
(farm papers are included under miscellaneous farm expenses) and expenses 
for education are properly entered in this account. 



SIMPLE FARM ACCOUNTS 23 

Various sums set aside by any members of the family for a savings 
account are entered here. Many incidental expenses such as doctor's bills, 
candy and cigars, life insurance premiums, fire insurance premiums on the 
dwelling, etc., are entered as incidentals. 

That portion of the cost of operation of the automobile chargeable to 
recreation or pleasure is transferred from the automobile account at the end 
c,f the year and entered here under "running expenses." 

As previously stated, expenses in connection with the dwelling cannot 
be included for income tax purposes. Consequently, cost of repairs on the 
house is recorded in this account. However, repairs to a house occupied by 
a hired man and his family and repairs to a house in which a tenant lives 
are proper farm expenses for the owner and are recorded under building 
rep.airs (page 67). 



24 SIMPLE FARM ACCOUNTS 

CHAPTER V. 

RECEIPTS. 

Many different kinds of products are sold from most farms and the greater 
the numher of enterprises the greater the variety of receipts. Items of in- 
come are classified into accounts to meet the requirements for tax reporting, 
but more especially for the convenience of the farm operator, both in recording 
the items and for studying the business. 

Crop Sales. On account of the regulations governing income tax reports 
the receipts from the sale of the three leading cash crops are recorded in as 
many separate accounts. Thus, if wheat, barley and flax are the three crops 
bringing the highest cash income the sales of each are recorded in an account 
by itself. Or, corn, potatoes and sweet clover might be the three leading 

cash crops in which case the sales of each are recorded separately. All 
crop sales other than those of the three leading crops are recorded together 
in one account. 

Only cash sales are recorded; however, if some material is traded, then the 
transaction is entered as a sale of the crop item; the article received in trade 
is recorded in the proper account under purchases or expenses. 

In recording sales of various commodities it is always desirable to enter 
dates of transactions, the quantities sold and the price per unit received. 

The sales accounts must carry the sales of material carried over from 
the preceding year as well as the sales of produce of the current year. The 
sales of carry-over material are balanced by the values of the material recorded 
:n the inventories for the beginning of the year; however, if no inventories are 
kept there is nothing to balance the carry-over, but the sales must be recorded 
just the same. The latter practice does not give a true statement of the year's 
business, nor does it give the correct data for income tax reporting. 

Frequently grain is placed in storage in an elevator, a storage ticket being 
taken therefor. If such grain is still in storage at the end of the year it is 
recorded in the inventory at the market price. Whenever it is sold it is then 
entered as a sale and not before. Any storage expenses in connection with 
such transactions are properly charged under miscellaneous expenses if they 
have not been deducted from the receipts. 

Cattle Sales, Transactions involving each class of livestock are recorded 
separately in order that some approximation may be made of the relative 
profitableness of each class. Furthermore, a comparison of the gross income 
from each enterprise often gives a good grasp of the real organization of the 
whole farm. 

All sales of cattle are recorded and trades are accounted for in a similar 
manner as with crops. Here, again, it makes no difference if stock is carried 
over from the previous year; the sale must be recorded at the time it is 
made, the value in the beginning inventory balancing the sale. 



SIMPLE FARM ACCOUNTS 25 

Horse Sales. Transactions involving horses are recorded in a similar 
manner as those of other classes of stock. Where horse trades are made, 
the stock disposed of is a sale and is recorded as such and the article re- 
ceived in trade is a purchase and so recorded. 

Hog Sales. Various classes of hogs are sold such as shotes, barrows, 
gilts, boars, sows, etc. Market hog sales are recorded so as to indicate the 
number of pounds sold and the price per pound, as well as the number of head. 
Breeding stock is usually sold by the head and in that case the weight, etc.- 
is not recorded. Hogs butchered and consumed on the farm are not recorded 
here but the value of meat consumed is recorded on page 65. 

Shi^ep Sales. Ewes, wethers, lambs and rams are common kinds of 
sheep sold. Stock sold for slaughter is usually disposed of by the pound 
while breeding stock is sold by the head. Returns for stock sold on consign- 
ment are generally made on the net basis, the various shipping expenses being- 
paid by the consignee and deducted from the sale price. In such cases only 
the net returns are recorded as sales. 

Poultry Sales. Poultry has formerly been sold largely in the local market 
but of late, considerable attention has been given to the larger wholesale mar- 
kets. Where shipped alive, the cash cost of crates and other cash outlay are 
recorded as expense. However, if cash is paid to labor for dressing poultry, 
or other class of stock for that matter, this expense should be recorded in the 
"hired labor" account. 

Egg Salesi. Eggs sold for cash or trade are recorded in this account. 
Eggs consumed on the table are not entered as sales but a: e recorded in the 
account for "food, fuel and house rent", (see page 65). Frequently eggs 
are traded for groceries in which case the eggs are recorded as sales and 
the grocery transaction is recorded in that account. 

Dairy Product Sales. When any kind of dairy products is sold the 
net receipts are recorded. Some care should be exercised in recording 
kind of product sold, amount and price per unit. In case of trade for groceries 
the transaction is handled in a similar manner as for eggs. 

Bills Receivable. This account is for the convenience of the farm opera- 
tor and does not enter into the income tax report. Whenever a bill is paid 
the transaction is completed in this account and the amount received is entered 
in the proper place for it under receipts. 

All sales, that are made with payments to be made sometime in the fu- 
ture, regardless of whether the promise to pay is in writing or verbal, are re- 
corded in this account. Frequently a partial payment is made wnen an article 
is sold by a farmer, the balance to be paid at a later date; the payment made 
is a cash receipt and is so recorded but the amount still due is recorded in this 
account. 

When a bill receivable has been carried on the books for a long time 
and every effort has been made to collect it without success and in the honest 



26 SIMPLE FARM ACCOUNTS 

opinion of the farmer it is. not collectable, then it may be charged as an ex 
pense in the miscellaneous account. 

Food, Fuel and House Rent. Available records indicate that from 40 per cent 
to 60 per cent, of the food consumed by the average farm family is furnished 
directly by the farm. Even for the smallest family this amounts to hundreds 
of dollars per year and for large families this income is considerably more. 
Frequently the statement has been made that board on the farm costs little 
or nothing but this is far from the truth. 

Vegetables and other garden truck, dairy products, eggs and meat 
furnished by the farm, reduce grocery bills markedly, although some farmers 
feel that they have not the time to produce these commodities. With in- 
creasing diversity of farming this account becomes more and more important. 

House rent is an item of considerable size. An estimate of this item is 
made, based on the size and value of the dwelling, usually being about 12 per 
cent, of the value of the building. 

The housewife is the logical individual to keep this record and many farm 
women take great pride in keeping the account, showing their share of the con- 
tribution to the family living^ The record may be maintained on a monthly 
basis with considerable accuracy, although separate daily records are recom- 
mended for some items which are variable from day to day. sucn as eggs and 
vegetables. In pricing commodities the farm price method should be used. 
The market price is the price which the farmer receives for these commodities 
rather than the retail price raid by consumers in town. 

Miscellaneous Recelpt«i. All cash receipts or the equivalent which are 
not otherwise provided for are entered in this account if they pertain to the 
farm business. A variety of items properly belongs here, such as income for 
work outside the farm, hauling school bus. sales of miscellaneous material 
such as gravel, sand, wool, coal, etc.. produced on the farm. Interest received 
on loans made to others, when secured by farm mortgages is properly entered 
here. 

Income from bonds or from any other business outside of the farm is 
not entered in this account but should be recorded in a separate account or 
set of books for that purpose. The accounts are arranged for the purpose of 
making tax returns and to study the farm business; consequently, transactions 
which do net pertain to the farm are not included 



SIMPLE FARM ACCOUNTS 27 

CHAPTER VI. 

SUMMARIES. 

Two general classes of summaries or balance sheets are used, the first 
being for the purpose of income tax reporting and the second for the study of 
the farm as a business. 

Income Tax Summaries. 

Income tax reports may be made on either the accrual basis or on the 
so-called "cash" basis, but those farmers who do not keep records of their 
business are compelled to make their tax reports on the "cash" basis, although 
this method does not truly give the net profit because of the difference in 
the amount or value of pror.erty carried over from one year to the next. 

"After becoming estal)lished en the accrual basis it is the simplest and 
fairest basis on which to report farm profits because — 1. The actual profits 
of the year are credited to the year in which they occur. Under the "cash 
receipts and disbursements" basis the actual sales reported in a year's time may 
represent the production of more than one year as in the case of selling corn, 
wheat or hogs, produced in two years' time. 2. The record of each year's 
business is completed to date. Difficulties are eliminated such as going back 
to previous years to the record of the cost of an animal in determining the 
profit on its sale^ This will need to be done if reporting on the "cash receipts 
and disbursements" basis. 3. Actual depreciation or losses on livestock are 
claimed in the year in which they are sustained. 4. When reporting on 
the "cash receipts and disbursements" basis the profit from the sale of all 
farm equipment, produce, and farm land must be reported as income in the 
year sold. When reporting on the accrual basis, the inventory value of live- 
stock and other products on hand at the beginning of the year can be claimed 
as a deduction from the gross sales. 

"The main disadvantages of the accrual method of determining farm 
profits is in changing from the "cash receipts and disbursements" basis to 
the accrual basis of reporting. This is because the value of all livestock and 
products on hand and raised on the farm must be counted as profits in the 
year the change is made unless ad.iustment to January 1st, 1917, is made from 
actual records or proofs satisfactory to the Commissioner of Internal Revenue. 

"The most favora])le time to start reporting on the accrual basis is when 
farming is first begun."* 

Accrual Summary. The .summary for income tax reporting on the accrual 
basis consists of the inventory values of all property except land and dwelling' 

* From North Dakota Farmer's Account Book, Agricultural College, N. 
Dak.. 1921. 



2S SIMPLE FARM ACCOUNTS 

at the beginning and end of tlie year; purchases; sales; expenses and de- 
preciation. 

The inventory values for the beginning of the year are added to the 
total purchases of the year; the inventory values for the end of the year are 
added to the total sales; the difference between these two sums shows a 
balance which is called "gross profit" by the Bureau of Internal Revenue. 
This balance does not include expenses and depreciation which are combined 
and deducted from "gross receipts". The result is "net farm profit" for in- 
come tax reporting on the accrual basis (page 87). 

"Cash" Summary. The summary for reporting income tax on the "cash 
receipts and disbursements" basis consists of purchases, sales, expenses and 
depreciation. 

The difference between purchases and sales is called "gross profits". 
Expenses and depreciation are combined as under the accrual basis and are 
deducted from the gross profits; the result is "net farm profit" on the "cash" 
basis of reporting. 

Farm Business Analysis Summary. The summary for the study of the 
farm business is made, not from the standpoint of the individual operator who 
is the head of a family, but from the standpoint of the investment. (See page 
93). The difference between all values entering into production and the 
total income represents the net returns. 

The first step in making this summary is to determine the total invest- 
ment. The value of land, including the buildings, with the total value of 
all other inventories at the beginning of the year constitute the investment 
(page 93, lines 1, 2, 3, and 4). For this purpose any mortgage on the property 
may be disregarded. 

In the case of tenants the value of real estate does not enter into this 
summary; only the property owned by the tenant or to which he holds title is 
considered. 

A considerable lart of the food consumed in the household is produced 
on the farm. In some cases fuel, such as lignite coal, wood, etc., are furnished 
for household use. Since the value of the dwelling enters into the total farm 
investment, the equivalent of rent of the house is an income from the farm. 
These items constitute income but are not included in income tax reports 
but are included as part of the return on the investment (page 93, line 9). 

If any interest has been paid on a farm mortgage it will have been 
entered under miscellaneous expenses (page 69) ; to balance this expense 
such amounts are entered in the summary (line 7, page 93). 

If there have been improvements to the property such as the breaking 
up of sod land, setting out trees, drainage, etc.. the cost of these will have 
been entered under expenses. They should now be combined and entered in 
this summary as increased value of property (line 8, page 93). 



SIMPLE FARM ACCOUNTS 29 

The value of the hilior and management of the operator is an expense 
of the farm. For the physical labor performed "going wages" are allowable; 
the value of management (see page 11) is estimated and this combined with 
the labor constitute a charge (line 20, page 93). 

There are two generally recognized measures of profit from farming 
operations, namely, interest on the investment and labor earnings of the 
operator. When either of these is to be determined the other is included as 
a deduction. Thus, if labor earnings are to be determined the interest on 
the investment is first deducted and the remainder is the amount that the 
operator gets for his work and management. 

Interest on the investment is the measure of profit that is compar- 
able with that of any other business and is determined by dividing the net 
profit or earnings on the investment (line 21, page 9.'?) by the total 
amount of the investment (line 5. page 93). This income or interest 
on the investment according to general farm experience amounts to from 
two and one-half to five per cent. 

The labor earnings of the operator (line IS. page 93) is the 
amount remaining after deducting interest on the investment and this 
generally has amounted to little more than wages of the hired man if as 
much as five or six per cent, is allowed as interest on the investment. Under 
some conditions labor earnings of the operator have amounted to very much 
more than this and also they have not infrequently fallen considerably 
below nothing. 



30 SIMPLE FARM ACCOUNTS 

CHAPTER VI 1 

MEASURES OF EFFICIENCY. 

In order to determine the degree of efficiency in any business it is 
desirable to have certain standards by which various operations may oe 
measured. It is recognized that farming is one of the most complicated of 
all lines of business on account of the wide variety of products raised 
on each farm and on account of the variety of conditions over many of which 
the farmer has little if any control. Such conditions as rust on wheat, 
insect pests, drought, too much rain, diseases of stock, etc., have a direct 
bearing on production and consequently on profits. Therefore, standards 
of efficiency must be established over a considerable period of years in 
order to overcome these conditions. Even then considerable care must 
be used lest some measure appears to show inefficiency or the opposite 
when, as a matter of fact, there may have been no possible way of changing 
the conditions. However, it is frequently possible to determine some of 
the causes of large or small profits by comparing various items or factors 
with certain more or less fixed standards. 

Size of Business. The amount of profit (or loss) varies with the 
size of the business in a general way. Farming is a family business 
and the efficient size of farm is that which can be properry managed and 
operated by the farmer and his family without large amounts of hired 
labor. In general the most efficient size of farm in the plains region of 
the Dakotas and Minnesota is apparently about 480 acres where grain 
farming is followed. In the western lart of the region the unit is some- 
what ilarger in acreage and in the eastern it is somewhat smaller. 

Where the greater part of the farm business is crop production, size 
of business may l)e measured ])y acreage as above indicated. If, however, 
considerable business is dene with livestock or if special or intensive crops 
are raised which are much more expensive than the grain crops then some 
other measure must be used for size of business. 

In considering size the use of labor i.s important, which may be slightly 
uiore efficient on la.'ge farms, but this advantage is more than offset on 
very large farms by some other disadvantages. 

Crop Acres per Horse. A great many farms support more work 
horses than are necessary. Some farmers raise colts to replace the old, 
worn-out animals and this is a commendable practice. The tractor is 
used by some to replace work horses but actual practice reveals that 
not as many horses are reilaced as is commonly believed. In considering the 
crop area in relation to the number of work horses, the tractor should be con 
sidered in the equivalent to horses. 

Where farms produce approximately the same crops the number of 



SIMPLE FARM ACCOUNTS 31 

"cro") acres i er horse" sometimes shows how one farm is more efficient 
than another. Tlie equivalent of the wo.k done l)y each horse is rep- 
resented hy that required to operate a certain number of acres of crops 
(see page 94). In North Dakota each horse does the work equivalent 
to that required on about 3S acres en the average. &ome farmers ac- 
complish the same amount of work with twenty five to thirty per cent, 
less horses than the average while others require as much more to do the 
same amount of work. 

Where considerable acreages of corn and potatoes are produced the 
above measure of 38 acres per horse is high; horses on these farms may 
do more actual days of work than on others because much more work is 
required per acre for these cro: s. The average farm horse in North 
Dakota works a])out SO days rer year at productive labor. 

Yield per Acre. The greatest factor that determines high or low 
costs per unit is yield ner acre. It costs little more to produce 20 
bushels of wheat i or acre than to produce 10 l)ushels. If the former yield 
is made the cost i er l)ushel is nearly 50 per cent, less than where the 
smaller yield is made under the same conditions. Even so, many continue 
to hold the idea that it is acres that determine profit rather than efficient 
production. 

While the farmer cannot control rust, rainfall, etc.. there are many 
practices that almost invariably lead to higher yield. Any farm that 
does not produce more than 11 l)ushels of wheat per acre as an average 
over a period of ten years should have a change of methods. As the different 
practices are used in ),roduction, the record of the resulting yield is of great 
value as the years go l)y, in determining which practice gives the best results. 
Income from Stock. The annual income from stock must be consider- 
ably more than the cost of feed. Roughly, feed is only about 75 per cent 
of the total cost. The dairy cow that produces less than 150 pounds 

cf butterfat in a year is scarcely more than a boarder. When butter fat 
sells for 50 cents per pound fie income from sales is only $75, which did 
not cover cost of feed alone in 1920 and scarcely did so in 1921. 

To find the total or real income from any class of stock the value 
of the stock at the beginning of the year is added to the purchases; the 
value of that class of stock at the end of the year is added to the sale.s of 
stock and stock products; the difference between the two sums represents the 
income. 

By using the foregoing method of calculation for each class of stock it 
is possible to arrive at some conclusion as to which classes are most profit- 
able. It is sometimes necessary to determine this for several years be- 
■ fore the true answer is found^ 

Machinery Value per Acre. When prices of machinery are high it 
fs almost a necessity that the maximum use be secured from each imple- 
ment. Many farms in the northwest are profitably operated with less 



32 SIMPLE FARM ACCOUNTS 

than five dollars' worth of machinery (including harness) for each acre 
cultivated. If the inventory va'lue of machinery (page 77) is divided 
hy the total number of acres in crops this figure is obtained. 

Some farms are equipped with certain classes of machinery that are 
used for only a very few days each year; such investments are frequently 
unprofitable. Among these might be mentioned such machines as silage 
cutters, threshing rigs, etc. Such equipment may well be owned and 
operated jointly by a number of neighbors, thus saving a large amount of 
overhead expense. 

Automobile Cost. Many farms are now equipped with a low-priced 
car. The time has come when the auto is practically a necessity but 
there is a very wide variation in the cost of operation even for business 
purposes. An annual cost of operation of more than $300 (including 

interest on investment and depreciation) is hardly justifiable unless the 
conditions are exceptional. 

Cost of Labor. During the war period wages were exceedingly high 
and the expense for this item has been more keenly felt, perhaps, than 
any other. If the total expense for labor, including hired labor, family 
labor and the operator's own work, is divided by the number of acres in 
crops an approximation of the labor cost per acre is found. Unless 
there is a considerable acreage of corn and potatoes or a large amount of 
livestock maintained, the labor cost per acre should be less than four 
dollars (1920). 

Many measures of efficiency may be calculated by the farm operator 
who studies the business of farming. For special types of farms, special 
measures or factors may be used. Probably the two most important 
measures of efficiency on farms of the northwest are yield per acre for 
crops and income per animal unit for stock. 



SIMPLE FARM ACCOUNTS 33 

PART TWO 

ILLUSTRATED ACCOUNTS. 

On the later pages will be foiirui the act-ount forms, showing the 
recorded entries of a North Dakota farm as of 1920. 

The arrangement of the forms for the various accounts has been 
made after years of experience in the endeavor to make them as simple 
and practical as possible. Further experience will doubtless show the 
need for minor changes but the general plan will be continued. 

It should be borne in mind that records maintained for purposes of 
making income tax returns are kept from the standpoint of the individual 
and the income of his dependents is legally his income^ On the other 
hand, the records for purposes of studying the farm business are main- 
tained from the standpoint of the farm; in this case all items of value 
entering into farm operation are recorded regardless of whether some la- 
bor is performed by the operator's son, for example, or whether it is done by 
a hired man. 

The page-and column-references in the summaries for the different 
purposes give full directions for including the ^iroper items for each of the 
desired results. 

The forms herein described, which pertain to income tax returns, 
are similar to those prepared by a committee of the American Farm Bureau 
Federation in cooperation with the U. S. Department of Agriculture and 
which were commended by the Bureau of Internal Revenue of the U. S. 
T^reasury Department for the purpose of making income tax returns. The 
forms and accounts have been adapted to conditions in the northwest and 
are now being used in the North Dakota Farmers' Account Book of the 
Extension Division of the Agricultural College. More than five thousand 
farmers of North Dakota are now (1921) using this system on their farms. 

The farmer who is beginning to keep records or the teacher who is 
giving instructions should secure the North Dakota Farmers' Account 
Book from the Agricultural College for the actual recording of the entries. 
Practice work or the starting of an actual farm record should begin with 
the inventories and depreciation accounts (pages 75 to 83). Then should 
be recorded the other Items of capital investment for the "be- 
ginning of the year". From this point to the end of the year the various 
items of expenses and receipts should be recorded as they occur, in the proper 
accounts. At the end of the year or at the end of the period of practice work 
the inventories (pages 75 to S3) are completed, following which the summaries 
"are calculated. 

The inventories for the close of the year are the same as the inventories 
for the beginning of the succeeding year and may be transferred directly into 
a new record book. 



34 SIMPLE FARM ACCOUNTS 



THE FARM PLAT. 

By locating on a plotted sheet the various fields and other features of 
the farm it is often possible to make some changes that materially increase 
the efficiency of operation. The illustration on the opposite page represents a 
farm as operated in 1920. Very frequently the placing of the farm in picture 
form makes it possible to see how to shorten the distance to certain fields or 
to improve the shape of the fields^ It is also desirable to keep a record of 
the crop rotation from year to year, together with manure applications, etc. 
The record of yield of the various crops may be placed on the plat if desired; 
also some of the tillage practices may be recorded. All such information be- 
comes more and more valuable as the years go by, not only in determining the 
best practices for the future but in case of sale these records become of great 
value to the new owner. 

There is a large number of conditions that must enter into the arrange- 
ment of fields, among them being soil, drainage, convenience, character of 
crops to be raised, etc. Natural features such as coulees, lakes, sloughs, 
hills and stones must be considered so that the most economic use is made 
of the fields. 

If soil and drainage conditions would permit, the alfalfa (opposite page) 
might better have been where millet is at present. The permanent alfalfa 
would then be adjoining the pasture and also the farmstead. This would mean 
a saving in fencing as well as in convenience. 

The flax might well have been placed east of the farmstead; the oats and 
barley fields could have been arranged so that the long way extended east and 
west; thus a saving in time in going to and from them would be made; the 
"turns" would also be longer and consequently less of them. 

It is of considerable importance to the farmer in laying out his farm for 
the first time to take into consideration the location of the farmstead. If 
physical features such as hills or stream channels are on the farm a location 
with respect to these may outweigh the desirability of some location with strict 
adherence to convenience and time-saving. Ordinarily the farmstead should 
be at or near the center of the farm and reasonably near to me public road 
which leads to market. It is seldom desirable that the farmstead be located 
at one corner of the farm for this necessarily causes long trips to and from 
some fields. 

By plotting on a separate sheet the location of the buildings with 
respect to each other it is often seen how the lay-out may be improved at 
small expense and cause considerable saving of time. This is especially true 
when new buildings are to be constructed; by use of a picture of the farm- 
stead it is easy to get the various advantages and disadvantages of location 
in mind. 



FARM PLAT 







/ 




/ 






/ 

1 




/"^ 






1 


1 




\ LAKE - 54 A 


y PERMANENT 
' PASTURE 

60 -- A 




V— y 


ll f 


WHEAT 
133 - A 


i 1 

OATS 1 BARLEY 


l> 1 

FLAX || MILLET . 
10 A ji 12 A ' 




44- \ 1 20 A ' 


1 ' 

ALFALFA 1 'FARMSTEAD | 
8 A I '° A j 

1 1 




! 

! 1 
1 1 





36 SIMPLE FARM ACCOUNTS 

ACREAGE AND YIELD OF CROPS. 

On the opposite page are indicated the acreage and yield of the various 
crops raised. The acreage of each crop seeded is recorded at the close of 
the seeding period; the yields are entered immediately after harvest. Any 
crops which are not indicated on the left side of the page should be entered iji 
the blank spaces left for that purpose^ It will be found desirable to enter 
the variety of various crops in parenthesis as indicated for wheat, oats and 
others. This record then becomes an excellent guide based on fact as to 
which varieties give the best results, especially when the system is followed 
for a number of years and the conditions of different years are encountered 
with the various varieties. 

If the land is owned entirely by the operator the acreages and yields are 
entered in the columns under "owned land". If the farmer rents some ad- 
ditional land or rents the entire farm the acreages and yields are entered 
under "rented land". If land is rented on shares the amount of the crops 
which the renter receives is entered under "share received". If land is 
rented for cash, the entire amount of production is entered under "share re- 
ceived", and the amount of cash rent paid is entered under expenses (page 69). 

Where land is share-rented the fraction under "share received by opera- 
tor," which represents the share that the operator receives, is enclosed with 
a circle. 

Where two crops are planted on the same land, such as sweet clover and 
wheat, the wheat acreage is entered as usual; the sweet clover acreage is also 
entered but the figures are enclosed in a circle. The acreage of sweet 

clover is then not indluded in adding to find the "total acres in crops." 

THE FARM AREA. 

The form at the bottom of the opposite page shows other land as well as 
the crop area. Land that is in prairie sod that is used for pasture is entered 
as "permanent pasture". Land that is seeded to timothy or other grass, even 
though used for pasture, should be included above with the crops Also, hay 
land, even though it may consist of sloughs and "pot holes" should be included 
above, if hay is cut from it. The land that is occupied by the farmstead includes 
the land on which the buildings stand, barn lots, garden, etc. There is al- 
ways some waste land on the farm, if no more than that occupied by the public 
roads. This together with lakes, sloughs, and any other land that has no 
productive use, is entered as "waste land." 

"The total acres in farm" consist of the total farm area of owned or 
rented land, entered under the respective headings. 

If any land is rented out and not operated by the owner, it is entered in 
the blank space under "owned" land. 



SIMPLE FARM ACCOUNTS 
ACREACiE AND YIELD OF CROPS 



37 





Owned Land 


Rented Land 




Crojis (Jrowii 


Acres 
133 


Yield 

])er 

Acre 

lOl 


Total 
Yield 

13D!;\ 


Acres 


Yield 

per 

Acre 


Total 
Yield 


Share Received 
by operator 

{1-2 2-3 3-4 3-5) 


\\h3at (Marquis) 










Oats (New Victory) 


u 


IH 


(13S 










Barley 


20 


s\ 


lUf) 










Rye 

Flax (N.D. 114) 

Speltz 

Corn 


10 


13 


130 










Potatoes 
















Hay, prairie 
















Alfalfa (Griiiini) 
Sweet Clover 
Millet 


8 
12 


3 
3 


24 
31, 










Annual Pasture 
















Total Acres in Croi)s 


227 
















FARM AREA 




Owned 


Rented 


Total Acres in Croj 

Permanent Pasture 

Timber 

Farmstead, Barnh^ts, ( 

Waste Land — Roads, I 


s (from above) 

iarden, etc. 
jakes, etc. 






227 
60 

10 
63 




Total Acres in Farm 








360 





3S SIMPLE FARM ACCOUNTS 



CROP SALES. 



Because of the demands for income tax reports the sales of crops are 
recorded in four accounts; the three leading cash crops are accounted for in 
three separate accounts and all other crop sales are recorded together in one 
account. These crops may vary from year to year and from farm to farm 
and therefore each farmer must write in the heading for each of the three ac- 
counts. 

The accounts on the opposite page show that wheat, barley and millet 
were the leading cash crops on this farm ; that is, these were the crops that 
brought the highest cash return. On another farm these accounts might have 
been wheat, flax and potatoes, depending on which brought the highest cash 
returns. 

All crop sales should be recorded as fast as they occur. Grain hauled 
to the elevator for storage or which will be sold later and for which a storage 
ticket is received, is not a sale and should not be recorded until the grain 
is actually sold. 

If any kind of grain or other crop is traded for another kind of seed, or 
any similar transaction is made, such transactions are sales and are so recorded. 
The article or commodity received is considered as a purchase and is entered 
as an expense in the proper account. If a trade is made, one commodity for 
another, and no price is named in the transaction, then the market price is 
used as the basis of purchase and sale. The value of seed secured in trade in 
this manner is recorded as an expense on page 69. 

At the close of the year each account is totaled separately and the 
total of each is transferred to the proper place in the summary. The re- 
ferences to pages to which the totals are to be forwarded, indicated on the 
opposite page, are for the income tax report on the accrual basis. If it is 
desired to make the tax report on the "cash" basis, the summary for this is 
found on page 89 and the references to pages from which the amounts 
are to be transferred are there indicated. 



SIMPLE FARM ACCOUNTS 
CROP SALES 



39 











Amt. 


Da 


te 




Wheat Sales 


Ree'd. 


Mch. 


10 


53 bu. (</. 


$2.75 


f 14.5 


75 


Sept. 


3 


(35 bu. C" 


2.30 


149 


50 


Sept. 


4 


135 bu. c«> 


2.25 


303 


75 


Sept. 


() 


142 bu. («, 


2.28 


323 


76 


Sept. 


/ 


133 bu. (« 


2.30 


30o 


90 


Sept. 


8 


145 bu. (m 


2.28 


330 


60 


Sept. 





137^ bu. (« 


2.24 


308 


00 


Sept. 


It) 


141 bu. ^z 


2.22 


313 


02 


Sept. 


i;:; 


135 l)u. (« 


2.23 


301 


05 


Sei)t. 


14 


133 1)U. (a 


2.27 


301 


91 


Total (Forward to page 87, column 3) 


Si^7S3 


24 



Barley Sales 



Sept. 15 75 bu. f. $ .(50 
Sei)t. 1() (50 bu. c .()2 



Total (P'orward to page 87, column 3) 



s 45 00 
37 20 



$ 8< 



20 



Millet Sale; 



Sept. 15 3 T. Millet di $12.00 



Total (Forwartl to page 87, column 3) 



■S 36 00 



36 00 



All Other Crop Sales 



Sept. 1() 10 bu. Flax (y $1.40 



Total (Forward to page 87, column 3) 



$ 14 



S 14 00 



00 



40 SIMPLE FARM ACCOUNTS 

CATTLE PURCHASES AND SALES. 

For convenience in keeping tlie accounts, all direct transactions involving 
cattle are recorded in the same account. AH cattle bought during the year 
are recorded under "purchases" and all cattle sold are entered under "sales". 
Cattle purchases are capital investments. 

Care must be exercised by the farm operator to see that sale values are 
not recorded under purchases and vice versa. Some farmers follow the practice 
regularly of entering under "details of transaction" such expressions as il- 
lustrated opposite, namely, "1 cow (bought)". Thus the entries of purchases 
and sales can be checked up later after memory fails to bring to mind whether 
a certain entry represents a purchase or sale. Such difficulties are not likely 
to occur unless there is a large number of similar transactions. No items 
are recorded under "purchases" and "sales" except cattle bought or sold, 
respectively. 

If the income tax report is to be made on the accrual basis, the total of 
column 1 is transferred to page 87, column 2, opposite the word "cattle." 
If the report is made on the "cash" basis, only the purchase price of cattle 
bought during the year and sold during the year can be included in the sum- 
mary on page 89. Cattle bought during the year but not sold may be 
charged in a later year when the cattle are sold. If the total purchases of 
cattle are transferred to page 89, ("cash" basis of reporting) then this cost 
cannot be charged in a later year when the cattle are sold. All difficulty is 
avoided if report is made in the accrual basis. 

HOG PURCHASES AND SALES. 

All transactions involving hogs are recorded in this account in the 
same manner as cattle transactions in the cattle account. The total of column 
1, when there are any purchases, is transferred to page 87, column 2, op- 
posite the word "hogs" if the report is to be made on the accrual basis. The 
total of co'lumn 2 ($111.60 opposite) is transferred to page 87. column 3. 

Hog purchases are capital investments. 



SIMPLE FARM ACCOUNTS 
CATTLE PURCHASES AND SALES 



41 



Date 


Details of Transaction 


Pur- 
chases 


Sales 


Dec. 1 
Dec. 2 
Dec. 2 


1 heifer (2 yr.) (Meat) @ 8 cents 
1 bull calf ■ 
1 cow (liought) 


f 

50 
125 


00 
00 


S 48 


48 






■f 175 


00 


S 48 


48 






Col. 1 




Col. 2 





HOG PURCHASES AND SALES 



Date 


Details of Transaction 


Pur- 
chases 


Sales 


Nov. 16 


5 hogs - 930 lbs. (<r Pi cents 






■S? HI 


60 










i 111 


60 






Col. 1 




Col. 2 





42 SIMPLE FARM ACCOUNTS 

DAIRY PRODUCT SALES. 

Nearly every farm now produces some surplus of dairy products that is 
either sold or traded for groceries or other commodities. Whether sold or 
traded, any dairy products, such as milk, butter, cream, etc., that are disposed of 
off the farm, are recorded as sales in this account. If given in trade the articles 
received in trade are charged under expenses or purchases. This is especially 
necessary where it is desired to determine the cost of board for hired labor; if 
the items of groceries received in trade are not included in the grocery account, 
the charge for board for labor is not correct. 

The most accurate method of recording dairy sales is to make the entries 
as fast as sales are made. Where cream is shipped and the returns are made, 
with the expense of shipment deducted, the net amount received is recorded in 
this account and no entry is made for the expense of shipment. However, 
if the farmer pays any expense direct in connection with the shipment, which 
is not deducted from the receipts, this expense is recorded in the proper ac- 
count. 

Frequently, where there are large numbers of transactions each month, 
as when whole milk is sold daily, the amounts of these sales for the month 
are recorded on separate sheets and the monthly totals are recorded at the end 
of the month in this account. This method is not so accurate as where 
each sale is recorded in the account directly. 

When cream is sold many farmers record with the entries the price re- 
ceived per pound or per gallon and also the percentage of butterfat contained. 
This record may become very valuable later in case of any controversy with 
respect to past transactions. 

The illustrations (opposite page) show how one farmer made the entries. 
It is noted that one entry shows that 10 pounds of butter was given in trade 
for groceries and the amount was included in the total for the month. 

At the end ofl the year the total of this account is forwarded to page 87, 
column 3, if the income tax report is to be made on the accrual basis. 



Date 

Jan. 
Feb. 

Mch. 

Apr. 

Apr. 

May 

June 

July 

Sept. 

Oct. 

Nov. 

Dec. 



SIMPLE FARM ACCOUNTS 
DAIRY PRODUCT SALES 



43 



Kind and quantity of 
products sold 



Amt. 
Rec'd 



73 lbs. Butter 

45 lbs. Butter (10 lbs. 

traded for groc.) 

23 lbs. Butter 

25 lbs. Butter 

10 lbs. Butter (trade groc) 

15 lbs. Butter 

20 lbs. Butter 

18 lbs. Butter 
280 fits. Milk 
420 (its. Milk 
515 qts. Milk 
406 (its. Milk 



f 35 



% 



Date 



Forward 



V271 U 



Kind and quantity of 
products sold 



Forwarded 



Amt. 
Rec'd 



U 



Total (forward to page 
87, column 3) 



%271 U 



44 SIMPLE FARM ACCOUNTS 

HORSE PURCHASES AND SALES. 

Purchases of horses are capital investments. Records of purchase and 
of sale are placed in the same account for convenience in recording. All 
horses, colts, stallions, etc., bought or sold are recorded in this account. If 
a horse is traded the transportation is recorded as a sale and the article re- 
ceived in trade is recorded in the proper expense account. 

The same methods apply to the transfer of the totals of this account to 
the income tax summary as apply for cattle. When reporting on the accrual 
basis the total of column 1 is transferred at the end of the year to page 
87, column 2, and the total of column 2 is transferred to page 87, column 3. 

There were no purchases or sales of horses on this farm during the year 
1920. 



SHEEP PURCHASES AND SALES. 

Sheep purchases are capital investment. Record of purchases and sales of 
sheep is made in this account in a similar manner to that for cattle. 

The sales of wool should not be recorded in this account but are entered 
under miscellaneous receipts (page 49). 



SIMPLE FARM ACCOUNTS 
HORSE PURCHASES AND SALES 



45 



Date 


Details of transactions 


Purchases 


Sales 




■ 


None 












Total 














Column '. 




Column 2 



SHEEP PURCHASES AND SALES 



Date 



Details of transactions 



None 



Total 



Purchases 



Column 1 



Sales 



Column 2 



46 SIMPLE FARM ACCOUNTS 

POULTRY PURCHASES AND SALES. 

Like those of other classes of stock, purchases of poultry are capital invest- 
ments. Poultry sales are recorded whether fowls are dressed or alive. Charges 
for preparation for market are recorded in the proper account for expenses. 
If transportation charges are paid by the farmer they are recorded under 
miscellaneous expenses (page 69). 

The totail of column 1 is transferred at the end of the year to page 87, col- 
umn 2, and the total of column 2 is transferred to page 87, column 3, if tax re- 
port is to be made on the accrual basis. Thus, the amount, $43.03, (opposite 
page) is found in column 3, page 87, opposite the word "poultry." 



EGG SALES. 



Egg sales are recorded in this account as fast as they are made. Some 
housewives, who keep this record, have the habit of recording the detailed 
items on calendars or other sheets and then enter the total for each month in 
this account, which was the method followed on the farm here represented. 
This method is possibly not as accurate as to enter each sale as it occurs. 

Whenever eggs are traded for groceries or other commodities record is 
made in this account in the same manner as for a sale. The articles secured 
in trade are entered in the proper expense accounts. 

The total of the egg account ($88.83 opposite) is transferred at the end of 
the year to page 87, column 3, when tax report is to be made on the accrual 
basis. 

In connection with the egg account should be maintained a careful record 
of the number of eggs produced as well as the records of sales and table con- 
sumption. The average farm hen should produce not less than 100 eggs 
during the year. 



SIMPLE FARM ACCOUNTS 
POULTRY PURCHASES AND SALES 



47 



Date 


Dct;iil.s of transactions 


Purchases 


Sales 




Mch. 10 
Mch. 10 
Nov. 20 


1 rooster 
15 turkeys ^i $2.00 
3 doz. chickens 






$ 1 
30 
11 


7r, 

00 

28 










% 43 


03 






Column 




Column 2 





EGC SALES 







Amt. 






Amt . 


Date 


Quantity & Pi ice 
16 doz. fe $.49 


Rec'd. 


Date 


Quantity & Price 


Rec'd. 


Jan. 


-« 7 


84 


Forwai'dcd 


S 88 


83 


Feb. 


11 doz. &. .52 


5 


72 










Mch. 


5 doz. (a, MH 


1 


90 










May 


17 doz. (fii .o7 


6 


29 










June 


20 doz. t"> M 


1 


20 










July 


2U doz. (m .40 


8 


60 










Aus. 


11 doz. (" .45 


4 


95 










Sept. 


23 doz. (n. .42 


9 


(!(, 










Oct. 


24 doz. (a; .50 


12 


00 










Nov. 


21 doz. (m .52 


10 


92 










Dec. 


25 doz. (ot .55 


13 


75 




















Total (Forward to 








Forward 


$ 88 


83 




p. 87 , Column 3) 


S 88 


83 



48 SIMPLE FARM ACCOUNTS 

MISCELLANEOUS RECEIPTS. 

While space is furnished in the preceeding accounts for the principal 
items of receipts there is a considerable variety of miscellaneous sources of 
income other than those already indicated. Some of the common items are in- 
dicated on the opposite page. Besides these might be mentioned the follow- 
ing: — fire insurance on farm buildings (but not life insurance), pay for service 
on election or school boards, payments for managing a shippers' association pay- 
ment for soliciting, assessing, or any other outside work. Any receipts taken 
in. due to the efforts of the farmer or members of his family or as a result of 
investment in farm property, if not previously accounted for, are entered here. 

Interest on liberty bonds, or income from other bond securities, or Income 
from any business other than farming, is not entered in this record, but may 
be recorded in a separate account if desired. These are not a part of the farm 
income and must not be included^ Special provision is made on the govern- 
ment income tax reports for such income. 

Where a farmer owns a threshing rig and does a consitlerable amount of 
outside custom work, the details of expenses and receipts are recorded on page 
61. The total receipts (from page 61) are transferred to this account in 
order that they may be included in the income tax report. 

Some farmers make a practice of doing considerable plowing with team 
or tractor outside their own farms. Receipts for such work are recorded in 
this account and cash expenses therefor are recorded in the proper expense 
accounts. 

If any machinery, that has been in farm use, is sold or traded, any profit 
that is made, i.e., difference between book value and amount received, is re- 
corded in this account. If a loss is sustained, the difference between book 
value and amount received is recorded in the account for miscellaneous ex- 
penses. 

Frequently farmers receive small amounts as fees for breeding, where 
pure bred stallions, bulls, etc., are owned. Service fees of all kinds are 
recorded in this account. 

Many farmers exhibit stock and farm produce at fairs and receive premi- 
ums or prizes. Such receipts belong in this account. 

The total of this account ($312.27) is transferred at the end of the year 
to page 87, column 3, if income tax report is made on the accrual basis. 



SIMPLE FARM ACCOUNTS 
MISCELLANEOUS RECEIPTS 



49 



Diite 



Details of transactions 



Anit. 
Rec'd. 



June 15 


June 15 


June 25 


Sept 


G 


Oct. 


7 


Oct. 


15 


Dec. 


15 


Dec. 


31 



6 loads sand dr. .11.00 

Road work 

Scrap Iron 

Team and wa^on threshing 

Pasturing 3 horses 

1 calf hide 

Hauling School bus, 3 months 

Service on School board 



Receipts for outside threshing (from page 61, column 2.) 



6 
30 
10 
7S 
12 

3 

150 

13 



00 
10 
00 
00 
00 
67 
00 
■50 



Total (Forward to page 87, column 3) 



S 312 2 



50 SIMPLE FARM ACCOUNTS 

EXPENSES FOR FEED BOUGHT. 

Any and a'!'! classes of feed bought for livestock are recorded in this ac- 
count. It is desirable that, so far as possible, the class of stock that is to 
receive the different feeds bought be indicated; this is especially necssary if 
the cost of maintaining the various classes of stock is to be determined^ It 
is scarcely possible to ascertain very closely the profit or loss on any particular 
class of stock unless the amount of feed consumed is known; feed usually con- 
stitutes seventy-five percent, or more of the cost of keeping stock. 

The entries on the opposite page indicate how the records are made. It 
is frequently the case that feed is brought for several classes of stock, in which 
case an estimate at least should be made of the amount that is to be consumed 
by each class. 

On farms where considerable livestock is kept this is an important account 
because in such cases there is usually a considefable amount of concentrated 
feed bought, such as corn, oil meal, bran, etc., which are not produced on the 
farm. No record is made in this account of feed raised and consumed on 



the farm. 



Cash expense for grinding feed is not recorded in this account but is 
entered under miscellaneous expenses (page 69). 

The total of this account is transferred at the end of the year to page 
87, line 8. 



SIMPLE FARM ACCOUNTS 
FEED BOUGHT 



51 



Date 



Kind and (iiiantity of feed bought 



Mch. 1 
Mch. 15 



Feed for poultry 
I ton bran for cows 



Amt. 
Paid 



$ 3 
14 



Total (Forward to page 87, line 8) 



17 2o 



52 SIMPLE FARM ACCOUNTS 

EXPENSES FOR HIRED LABOR. 

On large farms the expense for hired help is large. Care should be 
exercised that all details of this account are given because it is closely examined 
by the tax collectors. The entry of "time employed" for each hired man 
should always be made because the cash cost of board for the help must be 
determined at the end of the year and this is, of course, based on the 'length of 
time that the help is boarded. 

No charge is allowable in this account for members of the family in 
the house. Neither is the charge for a hired girl in the house allowable if 
she is employed to assist in cooking and in other work for members of the 
family only. If, however, the hired girl is necessary because of extra work 
on account of hired men for the farm, the cost of such help in the house is an 
allowable charge. For example, if the housewife has all that she can do to 
care for the members of the family and extra men are hired for farm work 
during certain seasons, causing extra work in the house, and a hired girl is 
employed, the expense of such hired girl is allowable. 

If a family is employed Avho lives in a separate house on the farm, only 
the cash paid them is chargeable here. 

The cash cost of board is determined from the grocery account (page 
63) the charge, $8.00, being determined by the amount of laoor and the 
length of time employed. In making this charge the time put in at farm 
work by members of the family is not included. The cash cost of board of 
the operator cannot be allowed here because this is one of the items covered by 
the flat exemption allowed by law. 

To illustrate: — John Olson worked eight days: Geo. Jones worked 18 
days. These two periods of time combined make exactly a working month of 
26 days. In the grocery account (page 63) it is seen that the cash cost of 
board is $8.00 per month. This amount multiplied by 1 (month) gives the 
amount, $8.00, charged in the hired labor account for the cash cost of board. 
No allowance can be made for cash cost of board for the children because a 
flat exemption is made for their living. 

At the end of the year the total of this account is transferred to page 87, 
line 9, if report for income tax is to be made on the accrual basis. 



SIMPLE FARM ACCOUNTS 
EXPENSES FOR HIRED LABOR 



53 



Date 

June 28 
Sept. 17 



Names of Laborers 



John (jlson 
Geo. Jones 



'i ime 
Employed 



S das. 
IS <k>s. 



Amount 
Paid 



102 



Cash Cost 1 Month Board (from p. 63) 



Total (Forward to page 87, Uiiej>)_ 



8\00 



f 136130 



54 SIMPLE FARM ACCOUNTS 

FAMILY LABOR. 

By family labor is meant any farm work done by members of the family 
other than that of the operator. This does not include work done by the 
housewife or children in the house except such work as that in connection with 
dairying, etc., that is farm work. 

Frequently the housewife or children care for the poultry, assist with 
the dairy work and, occasionally, work in the field taking the place of a man. 
Whenever this is done the value of such work is entered in this account. While 
this is not an allowable expense for income tax purposes it is a part of the cost 
of operation of the farm and is, therefore, necessary when studying the farm 
as a business (see page 93). 

To illustrate: — it is seen (opposite page) that John worked for his father 
for one month during the year. This was in harvest, 1920; to have hired the 
same labor at going wages the cash cost would have been $90.00. Therefore, 
$90.00 was the value of the help thus rendered. It makes no difference so far 
as production is concerned whether the help was paid for in cash or not; the 
work was done. 

The farmer's wife took care of the poultry and assisted with the dairy. 
Since this was quite regular work the farmer estimated at the end of the 
year the amount of time put in each day by his wife; on a basis of a ten-hour 
day she did the equivalent of 1.4 months of work which was valued at the rate 
of $60.00 per month, making a total charge of $84.00. 

Since members of the family are considered as dependents and their in- 
come is the income of the head of the family for purposes of income tax report- 
ing, if payment were recorded for family labor an income for the same amount 
would be recorded under miscellaneous receipts. Thus the transaction would 
balance and therefore no entry is made for the tax report. It is included, how- 
ever, in the summary for the study of the farm as a business (page 93, 
line 11). 



SIMPLE FARM ACCOUNTS 
FAMILY LABOR 



Date 



Names ot Members of l^amily 
Engaged in Farm V/ork. 



Sept. 



John (18 yr. son) in harvest 
Wife caring for poultry & dairy 
(1 hr. per day for year) 



1 ime 
Employed 



1 Mo. 
1.A Mo. 



Value of 
Work Done 



$ 00 

S4 



Total (Forward to page 93, line 11] 



4 00 



56 SIMPLE FARM ACCOUNTS 

EXPENSES FOR MACHINERY. 

For convenience in Iveeping the records transactions relating to "new 
machinery" and "repairs" are placed in the same account, but the costs are 
recorded in separate columns. New machinery bought constitutes capital 
investment and all items of this kind are transferred to page 77, column 
3, at the end of the year. 

New machinery consists not only of various implements that are bought 
at "first hand", i. e. direct from the dealer, but also any implements that are 
bought "second hand" at a sale or otherwise. The cost or price paid is re- 
corded in this account under "new machinery" and then included in the in- 
ventory at the end of the year. 

The cost or buying price is recorded here even though credit is received 
for an old machine that was traded in on the transaction. 

Repairs for machinery cover a wide variety of expenses (see opposite 
page). Any part or addition to any implement or to harness, that maintains 
it in an ordinary state of repair, is included in this account. Small tools such 
as saws, hammers, forks, shovels, etc., when bought to replace those broken 
or lost, are recorded in this account under repairs. 

As previously indicated and following, page 58, separate accounts 
are provided for automobile and tractor expenses. The cost of repairs 
recorded in these two accounts is transferred to the general account for ex- 
penses for machinery (opposite) at the end of the year. 

Care must be used that the totals for supplies, such as gas and oil for 
tractor and automobile, are not entered in this account. 

At the end of the year the various items in column 1 are transferred to 
page 77, column 3. The total of column 2 ($160.73) is transferred to page 
87, line 13, when income tax report is made on the accrual basis. 



SIMPLE FARM ACCOUNTS 
EXPENSED FOR MACHINERY 



57 



Date 



Apr. 


i 


Apr. 


19 


Apr. 


19 


June 


19 


June 


19 


June 


25 


June 


25 


June 


30 


June 


30 


Julv 


1 


Aug. 


3 


Sei)t. 


3 


Sept. 


3 


Sei)t. 


3 


Oft. 


11 


( )ct. 


11 


Oct. 


11 


Oct. 


15 


Dec. 


10 



Details of Transactions 



Sharpening j)lo\v lays 

Drill repairs 

Post auger 

Tires set on wagon 

Clevises and bolts 

Repairs on hay rake 

Rej^air ])aits foi' mower 

2 pitch forks 

Rope for hay fork 

Repair on cultivator 

Canvases for binder, etc. 

Harness repairs 

Evener 

Repair on grain tank 

Repair on gas engine^ 

1 shovel 

1 hammer 

Shar])ening plow hiys 

Light sleigh 



Tractor rei)airs (from p. 59, col. 2) 
Auto repairs (from p. 59, col. 2) 



(Forward items col. 1 to p. 77, col. 3) 
(Forward total col. 2 to p. 87, line 13) 



Cost New 
Machinerv 



$25 



00 



Column 1 



Cost of 
Repjiirs 

s sloo 

\S5 
21.50 



6 


00 


8 


50 


3 


(!5 


1 


20 


2 


50 


32 


00 


1 


65 


30 


05 


19 


75 


1 


m 


8 


10 


3 


68 


2 


30 


] 


25 


4 


50 



$160 73 
Column 2 



58 SIMPLE FARM ACCOUNTS 

EXPENSES FOR TRACTOR. 

As previously pointed out (page 16) expenses for operating a tractor 
are divided into two classes to conform to income tax regulations. These are: 
first, gasoline, oil, etc., and second, repairs. No labor in operating the tractor 
or in repairing is included in this account, but this is accounted for in the 
labor account (page 53). The farmer, whose record is here shown had no 
tractor and therefore no expenses are recorded. It is believed that if more 
farmers kept a careful record of the operation of these large machines there 
would be fewer of them in use. 

To determine the annual cost of operating a tractor the following items 
must be considered: — depreciation, interest, repairs, fuel, labor, value of time 
lost on account of breakdown, etc. 

At the end of the year the total of column 1 is forwarded to page 69, 
and the total of column 2 is forwarded to page 57, column 2. 

EXPENSES FOR AUTOMOBILE, 

As previously mentioned (page 17) gasoline and oil are recorded 
separately from the cash repairs of the car. The entries on the opposite page 
show the method of recording and the kinds of entries included in the two 
classes of expenses. 

When the totals of the two classes of expenses are found at the end of 
the year it is necessary to divide each in proportion to the amount of use of 
the car for farm business and for pleasure. This can only be done by an 

honest estimate of the farmer because it is impractical for the average man to 
keep a record of the amount of time that the car is used for each purpose. If 
the honest judgment of the operator is that one-half the use of the automobile is 
for farm business, then this proportion of each of the two classes of expenses is 
transferred to the page and column referred to opposite. If, however, three- 
fourths of the use of the automobile is for farm business then this proportion 
of the cost is charged against the farm business. 

To illustrate: — the total expense for gas and oil (opposite) was $62.29. 
The farmer estimated that three-fourths of the use of the car was for farm 
business (as indicated). Three-fourths of $62.29 is $46.72, which is the "amount 
chargeable to the farm" and is transferred to page 69, to be included \n 
the general farm expenses. Three-fourths of the repair bill, $27.00, amounts 
to $20.25 and this amount is transferred to page 57, column 2. The 

remaining one-fourth of each of the totals is personal expense and is trans- 
ferred to page 73. and recorded under "running expenses." 



SIMPLE FARM ACCOUNTS 
EXPENSES FOR TRACTOR 



59 



Date 



Fuel and Oil 



Amount 
Paid 



Col. 1 



Date n Rei);iirs & Parts 



Amount 
Paid 



Col. 2 



EXPENSES FOR AUTOMOBILE 



Date 


Gas and Oil 


Amount 
Paid 


Date 


Repairs et Parts 


Amount 
Paid 


Mch. 10 

Mch. 25 
Apr. 5 
July 5 
Julv 5 
Aug. 10 
Oct. 15 


6 gal. gas 
5 gal. oil 
8 gal. gas 

50 gal. gas 

50 gal. gas 

5 gal. oil 

50 gal. gas 

7 gal. gas 


■f 1 

A 

2 
15 
15 

5 
15 

2 


50 
56 
00 
50 
00 
50 
SI 


Mch. 20 

Mch. 30 
June 5 


1 Si^ark Plug 
1 Tire 

Tighten rods 
Bolts and ])arts 


t 1 

18 

6 

1 


no 

00 
50 

50 




Total 


t 62 


29 




Total 


$ 27 


00 


^ H 


Amount chargeable to 
farm (Forward to 
page 69). 


$ 46 


1 /i 


V. 


Amount chargeable to 
farm (Forward to 
page 57, col. 2) 


$ 20 


25 






Col. 1 






Col. 2 



60 SIMPLE FARM ACCOUNTS 

THRESHING ACCOUNT. 

Comparatively few threshermeii know the cost of operation of their rigs 
and the matter of determining the charge that is to be made for custom worlc 
is therefore more or less of a guess or general 'concensus of opinion'. It 

is generally recognized that those operating threshing rigs have not made any 
considerable amount of profit out of the enterprise. Where a farmer owns 
a rig and does considerable custom work the accompanying record should be 
kept. While no rig was owned by the farmer whose record is here presented, 
some illustrative entries are indicated on the opposite page. 

The various items of expense for outside threshing that are recorded in 
this account are not entered elsewhere. Cash expenses for threshing on the 
operator's own farm are recorded in the various other accounts. Where the 
farmer hires all his threshing done or where he owns a rig but does little if any 
outside custom threshing this account is not used. All expenses for outside 
threshing are recorded in column 1 and all receipts for the same are recorded 
in column 2. 

Where several farmers own a rig jointly each may keep the record of his 
own expense in his general account, in which case this threshing account is 
not used. 

On page 18 is indicated how to find the total cost of operating a 
theshing rig; the difference between the receipts and expenses, including 
those previously pointed out, shows the profit or loss from tlie season's 
operations. 

At the end of the year or at any time after threshing is done the total of 
column 1 is transferred to page 69, and the total of column 2 is transferred to 
page 49. 



SIMPLE FARM ACCOUNTS 
THRESHING ACCOUNT 



61 



Date 



Details of Transactions 



Hired Labor 

Repairs on Separator 

Groceries for Cook Car 

Coal 

Oil 

Small Tools 

Received from John Doe for 8 days threshing 



(Forward total col. 1 to p 69) 
Total (Forward total col. 2 to p. 49) 



Amount 
Paid 



Column 1 I Column 2 



Amount 
Received 



62 SIMPLE FARM ACCOUNTS 

EXPENSES FOR GROCERIES. 

The housewife usually keeps this account. Care should be exercised 
that nothing is included in this account except groceries, that is, food bought 
or received in trade (see page 19). 

The record opposite shows the form for keeping the account for the month 
of January. At the close of each month, record is made of the number of 
persons boarded, as indicated. 

Whenever any kind of farm produce is traded for groceries the transaction 
is considered as a sale and purchase and the sale is recorded under receipts 
in the proper account and the groceries received in trade are recorded here. 

On account of lack of space the entire detailed grocery record is not 
presented here, only the totals for each month after January being shown. The 
detailed account should be maintained. 

Where groceries are bought for a cook car for a threshing crew, if a 
separate account is kept for threshing they are entered in that account. If 
little or no outside threshing is done these groceries are entered in this 
grocery account. 

At the close of the year the grocery account is totaled and on this 
farm the bill amounted to $298.10. The total number of months of board was 
ascertained by adding together the number of persons boaruea each month. 
The total grocery bill. $298.10, divided by the total number of months of board, 
3714, shows the actual cash cost of board to be $8.00 per month. This does 
not include the value of food furnished to the table by the farm, which is con- 
sidered in its proper place (page 65). 

Reference to the labor account (page 53) shows that there was 1 
month of hired labor besides that of the operator employed during the year. 
The cash cost of board per month, $8.00, multiplied by the number of months 
of labor boarded, shows the cash cost of boarding the labor to be $8.00. 
This portion of the board bill only is allowable as an expense for income tax 
purposes. 

The difference between the total amount of the grocery bill and the 
amount charged to labor is a part of the living that is covered by the flat ex- 
emption of $1000 for single men and $2500 for married men, and the amount 
Is chargeable in the household and personal account under running expenses 
(page 73). The cash cost of board for labor is carried to page 53 where it 
is Included in the total cost of labor. 



SIMPLE FARM ACCOUNTS 
EXPENSES FOR GROCERIES 



63 







Amount 






Amount 


Date 


Kind tt (Quantity 


Piiid 


Date 


Kind & Quantity 


Paid 


Jan. 5 


2 sacks Flour 
20 lbs. Sugar 
6 lbs. Coffee 
6 qts. Canned Fruit 


S 12 

/ 

2 


()( 

(Hi 

80 
1(1 






^ 298 


10 


Jan. 15 


Cinnamon, X'anilla 
Cloves 
Corn Starch 
Yeast 




7h 

50 
2C 










Feb. 


Groceries 


22 


2f. 










Meh. 


Groceries 


21 


■)'.'' 










Apr. 


Groceries 


2i) 


2f, 










May 


Groceries 


2/, 


8(, 










June 


Groceries 


2S 


9f, 










July 


Groceries 


23 


70 










Aug. 


Groceries 


41 


40 










Sept. 


Groceries 


2(> 


■50 










Oct. 


Groceries 


23 


20 










Nov. 


Groceries 


22 


30 










Dec. 


Groceries 


21 


75 




















Total 

1 


■f 298 


10 










Cost of groceries per 










5- 298 


10 


month per person 


8 


00 



Number Persons Boarded Each Month 



Januarv 


3 


Amount forwarded 


18h 


February 


3 


Julv 


3 


March 


S 


August 


3 


April 


3 


September 


^i 


Mav 


3 


October 


3 


June 


S-i 


November 


3 


Amount Forward 


I8h 


December 


3 




Total Months of Board 


37 \ 



64 SIMPLE FARM ACCOUNTS 

VALUE OF FOOD, FUEL AND HOUSE RENT FURNISHED BY THE FARM 

The value of the various commodities furnished by the farm toward the 
family living, such as dairy products, eggs, meat, vegetables, etc., is not 
properly an expense for income tax purposes, because the cost of producing 
this material has already been charged as an expense in connection with the 
farm operation. However, for the purpose of arriving at tlie real income 
from the farm this must be considered. 

The city dweller pays house rent or the equivalent in interest, deprecia- 
tion, taxes and repairs. The farmer does not usually pay house rent but has 
the dwelling for his use while living on the place, it being a part of the farm 
investment. Usually about 12 per cent, of the fair valuation of the building 
will give a reasonably close figure for rent. In the case of the record here 
shown, the house was valued at $600 and rent was charged at $72 per year. 

On some farms wood is produced and is consumed by the family; likewise 
coal is sometimes found on the farm and contributes to the family living. The 
values of these commodities are therefore a real source of income, replacing 
what would otherwise be bought. 

The average housewife is in the habit if keeping some kind of record of 
egg production, butter sales, etc. A daily record should be maintained of 

the consumption of various farm products that are used on the table, if the 
amount of these varies from day to day. Space does not permit the presen- 
tation of an assortment of forms for this purpose; any sort of sheets that will 
permit recording the amounts and values of milk, cream, butter, eggs, meat, 
vegetables, etc., so that the values of each can be determined readily at the 
end of the month, is suitable. The totals for each commodity for the month 
may then be entered in this form (opposite) so that at the end of the year the 
value of each commodity, as well as the total value of food furnished, can be 
found. 

Whenever butchering is done, the amount of meat, lard and other pro- 
ducts that are to be consumed in the house are recorded in lump sums. It 
may require several months to consume these products but it is unnecessary 
that they be divided between the months when they are consumed. 

At the close of the year the total ($366.7.5) represents the value of all food, 
etc., furnished by the farm to the family and to the hired help as well. By re- 
ference to the grocery account (page 63) it is seen that there were 371/4 months 
of board furnished during the year. The value of the food for one month, 
$366.75 divided by 87%, is $9.85; this amount multiplied by the mimber 
of months of hired labor (one) and deducted from the total value of 
the food, etc., leaves $356.90, which is the amount of direct income or' benefit 
that the family received from the farm. This amount is forwarded at the 
end of the year to page 93, line 9, where it makes up a part of the summary 
showing the real income. 



SIMPLE FARM ACCOUNTS 



65 





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4-i 



66 SIMPLE FARM ACCOUNTS 

PERMANENT IMPROVEMENTS AND REPAIRS TO FARM PROPERTY. 

Most farms of the west are being physically improved from year to year 
by the addition of buildings, fences, trees and shrubbery, drainage or other 
form of improvement. Whenever such additions are made they constitute 
capital investments and are recorded on the opposite page under "new improve- 
ment." Only the cash cost of the improvements is recorded in this account; 
these improvements should not be confused with repairs to permanent im- 
provements, since the latter only maintain the property in its ordinary state of 
usefulness. 

The actual value of improvements may be in excess of the cash cost indi- 
cated in this account. To illustrate: — the cost of lumber and other material 
for the poultry house (opposite page) amounts to $164. This does not include 
the labor required to construct the poultry house, which, in this case, was that 
of the farmer himself. In the inventory (page 75, column 3) the cost of 
the hen house is indicated as $200.00, which includes the value of the labor. 

When special labor is employed to construct permanent improvements and 
is paid for, record is made of such expense under "new improvement." 

At the close of the year the various items of permanent improvements 
are transferred to the inventory (page 7.5) as illustrated by the above poultry 
house. However, some items, such as trees and shrubbery are not recorded 
in the inventory separately, but their value is reflected in the value of the 
land (page 93, line 1). 

"Repairs to permanent improveniputs" consist of all the material purchased 
for the maintenance of the buildings, fence, etc., (except repairs to dwelling 
which are not allowable for income tax purposes). Lumbtur, nails, cement, etc. 
used for replacement purposes come in this class as well as paint, and shingles 
for repairs to the roof. However, cement and other material for a new floor 
in a barn or shingles for an entire new roof, etc. are "new improvements." 

It is expected that the buildings will be maintained in an ordinary state 
of usefulness and preservation and this is taken into consideration w^hen the 
"life" of the structures is estimated as the basis for determining depreciation. 

The total of the items in column 2 ($8.00) is forwarded to page 87, line 
12, when the income tax report is made on the accrual basis. 



SIMPLE FARM ACCOUNTS 87 

PERMANENT IMPROVEMENTS AND REPAIRS TO FARM PROPERTY 



Date 



Apr. 


16 


June 


lU 


Sept. 


6 


Sept. 


6 


Oct. 


6 



Items of Improvement 



1 roll roofing (repairs) 

Hay carrier 

Lumber for hen house 

Hardware and glass for hen house 

Lumber for repairs 



New 
Improvements 



30 

149 

15 



Total (Foi-ward to page 87, line 12) 



Repau's on 

Permanent 

Improvements 



00 



6 00 



Column 1 



$8 00 



Column 2 



68 SIMPLE FARM ACCOUNTS 

MISCELLANEOUS FARM EXPENSES, 

Some of the common items of expense that are entered in this account 
are indicated on tlie opposite page. 

Many farmers do not realize that such items as subscriptions to 
farm and livestock journals are proper farm expenses. (Newspapers are 
not). A part at least of the use of the telephone is for farm business and it 
therefore is a farm expense. 

It frequently happens that a farmer makes a trip l)y rail or auto to some 
point on farm business, such as for finding a market for a product, purchasing 
feed or cattle, etc., and the cash expense of these trips (except board) is a 
proper expense both for income tax purposes and for purposes of studying the 
farm business. 

Membership in agricultural organizations is held for the purpose of im- 
proving the business of the farm in some direct or indirect way. Consequently, 
the cost of such membership is a farm expense. 

The thresh bill is a direct farm expense; if however, the farmer furnishes 
the thresherman with feed for his horses and this feed has been raised on 
the farm (not bought) this is not included in the thresh bill. If the feed is 
bought it is entered as "feed bought" (page 51). To illustrate: — the thresh 
bill (opposite page) was $.525.00; if the farmer agreed to furnish oats to the 
value of $100.00 in addition to this charge and he had raised these oats on the 
farm this item cannot be included as an expense because the cost or expense 
of producing these oats has already been charged in the various accounts; to 
make a further allowance for the value of the oats as an expense would consti- 
tute a double charge. But it may be remarked that these oats could be sold 
for $100, cash. If they are sold instead of being fed to the thresher's horses, 
the threshing bill is then increased $100 and the sale of the oats is charged as 
a receipt which balances the extra $100.00 expense in the thresh bill. 

No items of a personal or household character are permissible in this 
account; these are recorded in the account for that purpose; such expenses 
are not farm expenses and cannot be allowed for income tax purposes or for 
farm business study. 

It is a regulation governing income tax records that all items of supplies 
bought, that pertain to the farm business, be recorded in this account; therefore 
the fuel and oil expense for a tractor (page 59, column 1) is transferred to 
this account at the end of the year. Also, that portion of the gas and oil used 
for operating the automobile that is chargeable against the farm business, 
($46.72^page 59, column 1), is included here at the end of the year. 

The total of the miscellaneous farm expenses (including fuel and oil) is 
tranferred at the end of the year to page 87, line 11, to be included in 
the income tax summary and later in the farm summary. 



SIMPLE FARM ACCOUNTS 
MISCELLANEOUS FARM EXPENSES 



69 



Date 



Details of Transactions 



Amount 
Paid 



Date 



Details of Transactions 



Amount 
Paid 



Mch. 
June 
June 
June 
June 



June 29 
June 29 
Sept. () 



Sept. 
Sei)t. 
Oct. 
Oct. 



Taxes 

Phone Rent 
Testing 3 Cows 
Fire Insurance 
Millet Seed 
Freight on Seed 
Dakota Farmer 
5 Yrs. Subscription 
Expenses to Fargo 
Account Farm 
Farm Biu'eau 
Membership 
Twine 
Thresh bill 
Interest on note 
Horse Shoeing 



Forward 



$123 
18 
10 
2o 
20 



10 

106 

525 
8 



10 00 



SS77 3 



Forwarded 



$877 



37 



Gas and Oil (from 
p. 59 col. 1) 



00 



00 



Gas and Oil (from 
p. 59 col. 1) 



46' 



Total (Forward to 
p. 87, hue 11) 



$924 



09 



70 SIMPLE FARM ACCOUNTS 

BILLS PAYABLE. 

With the system of farming in practice in the northwest it is almost a 
matter of necessity that considerable farm business be done on credit. Money 
is borrowed at the bank; machinery and other equipment is bought to be paid 
for "in the fall" after the crop is threshed; building material is often purchased 
in the same way; in fact, where one crop is depended upon entirely as a 
source of income very many items of expense are carried to the fall season. 
The account for "bills payable" is used entirely for convenience as it 
does not enter in any way into the summaries. 

Such bills as are contracted to be paid on a definite date are entered in this 
account. For example, money borrowed (opposite page) is recorded with the 
date borrowed, name of party from whom borrowed, rate of interest to be paid, 
date due, date paid and the amount of interest paid. The amount of interest 
paid is transferred to page 69 where it becomes a part of the expenses of opera- 
tion if the loan was in connection with the farm business. Mortgages are re- 
corded here and any interest paid on same is an expense to be recorded on 
page 69. 

Current bills, such as those for groceries, machinery repairs, etc.. may 
be recorded here as contracted; the farm operator should never fail to obtain 
and preserve the sales ticket or other form of record made by the dealer at 
the time articles are purchased on account. Unintentional mistakes are fre- 
quently made and the farmer has little recourse unless his part of the record 
is available to correct the errors. 

BILLS RECEIVABLE. 

Record of money due the farmer is even more important than of bills 
payable because it is usually necessary for notice to be sent, requesting pay- 
ment. This is especially necessary if any considerable amount of credit bu- 
siness is done. 

Frequently farmers sell grain or other commodities to neighbors or 
others, which are to be paid for at later dates, such as the transaction indi- 
cated with Joe Ressler on the opposite page. This bill of $75.00 was not paid 
before the close of the year; in such cases the items are transferred to the 
record for the following year. If the time comes when it appears that certain 
bills receivable will never be paid, they are then transferred to the account 
for miscellaneous expenses and become part of the record for income tax and 
other purposes. 

Whenever interest is received on a bill receivable in connection with a 
farm transaction, such interest is recorded in the account tor miscellaneous 
receipts (page 49). 



SIMPLE FARM ACCOUNTS 
BILLS PAYABLE 



71 



Date Con- 
tracted 



A])!-. 1 



To Whom 



First Natl. Bank 



Rate of 
Interest 



When 
Due 



Nov. 1 



When 
Paid 



Oct. 1 



Amount of 
Interest 



8 00 



Amount of 
Principal 



200 00 



BILLS RECEIVABLE 



Date 
Issuetl 

Apr. 4 



From Whom 



Joe Ressler 
30 bu. wheat 



Rate of 
Interest 



Date 
Due 



Oct. 30 



Date 
Paid 



Amount of 
Interest 



Amount of 
Principal 



00 



72 SIMPLE FARM ACCOUNTS 

HOUSEHOLD EXPENDITURES AND PERSONAL ACCOUNT. 

This record is generally of primary interest to tlie housewife, especially 
if she is thrifty. Many people "wonder where the money goes". There is 
only one way to find out with accuracy and that is to keep some kind of record. 

The form and entries on the opposite page show a simple method of re- 
cording the household and personal items. The entries are some of the com- 
mon ones of all the members of the family. In all cases the amounts paid 
are recorded in the first column; they are then distributed to the various sub- 
divisions of the account. 

Only one item for groceries for the year is entered in this record; by 
reference to page 63, it is seen that the total of groceries bought during the 
year amounts to $298.10; the part of this chargeable to labor was transferred to 
the labor account (page 53); by subtracting this amount, $8.00, from the total 
grocery bill for the year, $298.10, the remainder, $290.10, is found and this is 
the value of the groceries chargeable to the family. This amount is entered 
in this account and classified under "running expenses". 

The expense for operation of the automobile for pleasure properly belongs 
in this account. On page 59, column 1, it is seen that the total cost of 
fuel and oil for operating the car for the year was $62.29. Of this amount, 
three-fourths, or $46.72, was charged to the farm business (page 69); the 
difference between this amount and the total, is $15.57, whlcti Is the cost of 
fuel for operating the car for pleasure; this amount is entered in this account 
and classified under "running expenses." 

Likewise, the charge for repairs of the automobile is divided between 
farm and pleasure purposes and that part chargeable to pleasure (differencj be- 
tween total repair cost and amount chargeable to farm, (page 59, column 2) is 
included in this account, being $6.75, which is classified under "running ex- 
penses." 

Repairs to the dwelling are not recorded in the account for repairs to 
permanent improvements but are recorded in the housc^hold ana personal ac 
count and classified under "running expenses." 

The records of groceries, gasoline and oil and automobile repairs are 
entered in this account but once at the close of the year, after tne amounts 
chargeable to the farm are recorded in the proper accounts. 

None of the items recorded in the household and personal account is al- 
lowable as expense for income tax purposes. 



SIMPLE FARM ACCOUNTS 



73 









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U SIMPLE FARM ACCOUNTS 

DEPRECIATION ACCOUNT OF BUILDINGS. 

As previously pointed out valuation of buildings is based on the cost; 
depreciation is based on this valuation and this does not vary from year to year 
with market values. 

The entries on the opposite page are for the year 1920. 

Because income tax requirements demand nothing previous to 1913. this 
date is used as the basis or starting point; any buildings constructed previous 
to this date are recorded and the cost, less estimated depreciation to 1913, is 
used as the value for March 1 (column 2). If any building, fence or other 
permanent improvement is constructed after 1913 the date is recorded in 
column 1. 

New improvements, added during the current year, are recorded in column 
1, page &7, and at the end of the year are entered in column 3, opposite. 
Value of new improvements includes not only cash costs but value of labor 
involved in construction. No depreciation is allowed on permanent improve- 
ments for the year of construction. 

The rate of depreciation is determined by estimating the expected period 
of usefulness in years; one, divided by the number of years estimated, gives 
the percentage rate of depreciation (column 4). The amount of annual depre- 
ciation for each year is found by multiplying the cost (column 2) by the rate 
(column 4). The amount of depreciation previous to the current year (column 
5) is found by multiplying the annual depreciation (column 4) by the number 
of years from date of construction or 1913 (column 1) to the current year. De- 
preciation previous to the current year (column 6) added to the annual de- 
preciation (column 5) gives the total amount of depreciation to the end of the 
current year (column 7). 

Depreciation of the farm dwellings is calculated separately and is included 
in the farm summary (page 93) but cannot be allowed for income tax pur- 
poses. 

The total annual depreciation of farm buildings is determined by adding 
the items in coJumn 5, opposite; this total is forwarded to line 14, (page 87) 
if tax report is made on the accrual basis. 

When new improvements to any building are added in any year, the total 
depreciation to the end of that year is deducted from the original valuation 
and the value of the new improvements are then added; this new valuation is 
then the basis of depreciation for succeeding years; this new value is recorded 
in column 2 for the following year and a new rate of depreciation is calculated 
in a similar manner to that above explained. (See page 20). 



SIMPLE FARM ACCOUNTS 



75 



DEPRECIATION ACCOUNT OF FAIUM BUILDINGS 



Tenant House 

Barn 

Silo 

Corn Crib 

Granary 

Hog House 

Hen House 

Machine Shed 

Garage 



Fencing 

Tihng 

Drainage Ditches 






O a'bl 






P"^ 






o fcJ3 
O.S 






P^ 



5 0^ 
o >> 






03^ 
-I-' -u 



;si^ 



L9;^0 



S' /OOO 



1913 



30 



'200 



100\ 



Total 



Dwelling House 



Column 



1913 



'J '/(I 



50 



300 



$ 350 



30 



1100 



600 



230 



XX 



330 



3S5 



32\ 192 



22A 



76 SIMPLE FARM ACCOUNTS 

DEPRECIATION ACCOUNT OF FARM MACHINERY. 

As previously stated (page 21) depreciation of farm machinery is 
determined in the same manner as for farm buildings. 

The following illustration (from the opposite page) shows the process for 
the year 1920: a gang plow was purchased in 1917 (column 1) for $75 (colunni 
2). It was estimated by the farmer that the plow would last about 12 years 
which indicates that apprmoximately 8 per cent, (column 4), should be charged 
off each year as depreciation. The cost price, $75, multiplied by the rate, S 
per cent., gives the amount of annual depreciation or $6.00 (column 5) Since 
the plow was not used in farm work in 1917 to any considerable extent, de- 
preciation is allowed for 1918-19, two years; thus the depreciation sustained 
prior to the current year (1920) is $12.00 (column 6). By adding depreciation 
for the current year to that for the previous years, the total depreciation to 
the end of the current year, $18.00. is found (column 7). 

Because the use of the automobile is usually for farm business and pleas 
ure, attention is called to it. This farmer estimated that three-fourths of 

the use of the car was for farm business; the full value or cost price of the car 
was $600 in 1918 and this value is entered as indicated on the opposite page; 
however, $600 is not included in arriving at the value of farm machinery, three- 
fourths, or $450, being used. On the basis of farm use, $450 is the valuation 
on which depreciation is charged. Depreciation on the remaining $150 valu- 
ation may be charged in the personal account (page 73) if desired but this 
expense cannot be allowed for income tax purpose. 

Frequently a threshing rig is owned jointly by two or more neighbors. 
In that case only the share owned by the farmer keeping the record is entered 
on page 77, column 2. For the purpose of verification later it is advisable to 
enter the fraction representing the share owned. 

At the end of the year the total of column 5 is carried to line 15, page 
87, if income tax report is made on the accrual basis and to line 10, page 89, 
if report is made on the "cash" basis. 



SIMPLE FARM ACCOUNTS 
DEPRECIATION ACCOUNT OF FARM MACHINERY 



77 






o ^ g £c 

»-* " OJ rt 

o „, 3 O M 03 



^-a 


ca 


££ 


a 


^ OS 


a 
■3 


n 

^ a, 


03 
" to 

■2o 












o 
5c 


S c 0- 


go 


O -5-5 


^•2 



^•5 



"OS 

— ^ >i 

o] C ^ 

£o3 



Wagons' (1) 

(1) 
Tanks 


1913 
WIS 


f 30.00 
140.00 




10% 

5% 


f 3.00 
7.00 


t 18.00 
7.00 


■$ 21.00 
14.00 


Racks ( ) 
Buggies (1) 
Bobsleds ( ) 


1913 


30.00 




5% 


1.50 


9.00 


10.50 


Sleighs (1) 
Manure Spreader 
Sulky Plows ( ) 
Gang Plows (1) 
(1) 
Tractor Plow 


1920 

1913 
1917 


40.00 
7.5.00 


f 25.00 


8% 
8% 


3.20 
6.00 


19.20 
12.00 


22.40 
18.00 


Discs (1) 
Drags (1) 
Packers ( ) 


1916 
1916 


50.00 
24.00 




12% 
15% 


6.00 
3.60 


18.00 
10.80 


24.00 
14.40 


Corn Planter ( ) 
Corn Binder ( ) 
















Potato Planter 
Potato Digger 
















Drills (1) 
Binders (1) 
Headers ( ) 
Binders (1) 
Mowers (1) 
Rakes (1) 


1913 
1919 

1914 
1913 
1913 


110.00 
215.00 

125.00 
45.00 
20.00 




7% 

107c 

10% 

8% 

10%c 


7.70 
21. ,50 

12..50 
3.60 

2.00 


46.20 

75.00 

25.20 
14.00 


53.90 
21.50 

87..50 
28.80 
16.00 


Feed Mill 

Gas Engines (1) 


1917 


65.00 




107c 


6..50 


13.00 


19..50 


Tractor 
















Auto (I) 

Auto (full value) 

Cream Separator 


191S 
1915 


450.00 

(600.00) 

85.00 




207c 

147c 


90.00 
11.90 


180.00 
59.50 


270.00 
71.40 


Harness (4d.) 
( ) 
Small Tools 


191n 


160.00 




57c 


8.00 


40.00 


48.00 


191S 


20.00 






$ 194.00 
5 






Total 




% 1684.00 


■$ 25.00 


4 


% 546.90 
6 


■t 74090 


Column 


1 


2 


3 


7 



78 SIMPLE FARM ACCOUNTS 

INVENTORY OF SEED, FEED AND SUPPLIES, 

At the beginning and end of each year an inventory or invoice is taken 
of all personal property, the seed, feed, cash, etc., being shown on the op- 
posite page for a North Dakota farm for 1920. 

It is not necessary to measure the quantities of various products; every 
farm operator can estimate the quantities of grain of various kinds as well as 
feeds, etc., with considerable accuracy. 

Prices of various commodities are determined on the basis of market 
price less the cost of delivering to market. For those products having no 
market price such as corn fodder, silage, etc., the farm operator must estimate 
a fair price based on comparative values with other feed products which have 
a market price. Every farmer knows the feed value of his corn 
fodder, for example, as compared with hay. 

Any grain, potatoes, etc., that may be in the elevator or warehouse, 
which are not sold, must be recorded in the inventory at the market price at 
the time the inventory is taken. 

The amount of cash on hand to be used as working capital is recorded: 
there may be none on some farms such as those selling dairy products. Monev 
borrowed, on which interest is paid is not recorded in the inventory. 

Care should be exercised that the quantities of each kind of grain, espe- 
cially, are recorded in the proper columns. The material on hand at the 
beginning of the year, together with the price per unit and value, is entered 
on the left side at the time the record is started, which should be January 1. 
At the close of the record year the corresponding figures are entered at the 
right. 

The invoice or list of property at the end of the year corresponds exactly 
with the inventory at the beginning of the following year. 

Because of the requirements for income tax reporting the inventory 
record of three leading cash crops (page 39) must be made separately. If 
the three leading cash crops are wheat, barley and millet, as was the case on 
the farm here considered, then the inventory values for these three crops must 
be transferred to the summary separately (page 87). Thus the inventory 
value of wheat at beginning of the year was $575 and at the end of the year, 
$320. the entries of which are found on page 87 in columns 1 and 4, respect- 
ively. Likewise the entries for barley are made; since there was no millet 
on hand at the beginning or end of the year there is nothing to transfer for 
this crop. 

All other inventory values for the beginning of the year are totaled (col- 
umn 1 opposite) and forwarded to page 87, column 1; likewise all other in- 
ventory values for the end of the year (opposite) are added together and for- 
warded to page 87, column 4. 



SIMPLE FARM ACCOUNTS 
INVENTORY OF FEED, SEED AND SUPPLIES 



79 



Wheat 

Oats 

Barley 

Rye 

Flax 

Corn 



Ground feed 



Grass seeds 



Alfalfa 
Prairie hay 
Sweet clover hay 
I'imothy 



Silage 
Corn fodder 



Cash on hand 



Total 



On hand 
at beginning of year 



Amt. 



250 
700 
800 



Price 



15 



00 



Value 



00 



? 575 

560 

1120 



60 



iS 



On hand 
at end of year 



Amt. 



00 



00 



200 



Col. 1 



200 
550 



120 



15 



Price 



40 



10 



00 



$ 320 
170 



las 



Value 



00 



150 



200 



$1008 
Col. 2 



00 



00 



50 



80 SIMPLE FARM ACCOUNTS 

INVENTORY OF CATTLE. 

Inventoiies of cattle are made at the beginning and end of the year, the 
values being based on farm price. It is usually best to list each milk cow 
by name since cows frequently have a value above slaughter prices. Pure 
bred cattle should always be listed individually. Depreciation is allowable 
on pure bred stock based on a value representing the difference between 
slaughter prices and breeding value. Annual depreciation is determined on a 
basis of estimated life from prime (see page 10). 

Ordinary young stock may be listed in groups according to age as indicated 
on the opposite page. 

The totals of columns 1 and 2 are transferred to page 87, for the sum- 
mary at the end of the year, for the tax report on the accrual basis. 

INVENTORY OF HORSES. 

Horses are listed in the Inventory at the beginning and end of the year 
in a similar manner to that of other stock, except that depreciation of farm 
work animals is an allowable expense. Horses are considered at prime at 
about six years of age. The working life of horses in the northwest is from 
eight to twelve years (from prime) and depreciation is charged each year on 
the basis of the estimated working life. 

The value of work horses is not changed from year to year with market 
prices; if that is done it is not possible to charge depreciation as above indi- 
cated. (See opposite page). 

Young stock that is growing, appreciates and this increase in valuation is 
shown in the difference In inventories. 

The totals of columns 1 and 2 are forwarded to page 87, columns 1 and 4 
respectively, if income tax report is to be made on the accrual basis. If the 
report is to be made on the "cash" basis the loss, due to depreciation, which 
is not overcome by gains in the young stock, is determined by subtracting the 
total of column 2 from that of column 1. The amount is forwarded to page 
89, line 11. 



SIMPLE FARM ACCOUNTS 
INVENTORY OF CATTLE 



81 



Name or groups of cattle 


Beginning year 1 


End of year 


Number 


Value 


Number 


Value 


Bessie 
Mary 

Flossie 

Spot 

Susie (bought) 

2 yr. old heifers 

1 yr. old heifers 

2 yr. old steers 
1 yr. old steers 
Calves 

Bulls 


1 
1 

1 

3 


$100 

100 

75 

120 
60 


00 
00 
00 

00 
00 


3 

1 

1 


$100 
100 
100 
100 
125 

220 

15 

50 


00 
00 
00 
00 
00 

00 

00 
00 


Total 




•U5o 


00 




$810 


00 






Col. 1 




Col. 2 



INVENTORY OF HORSES 



Name or groups of animals 


Beginning year 


End of year 


Number 


Value 


Number 


Value 




Ben 

Bill 

Fancy 

Fannie 

Charlie 

Dobbin 

Sal 

Drivers 

Colts 

Stallions 


1 
1 


$175 
175 
150 
125 
140 
125 
75 

90 

75 


00 
00 
00 
00 
00 
00 
00 

00 
00 

00 


1 
1 


$160 
160 
137 
105 
120 
112 
65 

85 

75 


00 
00 
50 
00 
00 
50 
00 

00 

00 






$1130 




$1020 


00 






Col. 1 






Col. 2 





S2 SIMPLE FARM ACCOUNTS 

INVENTORY OF HOGS. 

Hogs are listed at the beginning and end of the year and their value if 
based on farm price. No depreciation is allowable on hogs unless there is a 
special breeding value above market price. Such depreciation is determined 
in a similar manner as for cattle. 

Hogs that are raised and sold or butchered within the year do not appear 
in the inventories in any manner. 

The various classes of hogs, such as sows, shotes. etc., may be listed in 
groups where the stock is neaiiy of the same age and size. 

The totals of columns 1 and 2 are forwarded to page 87, columns 1 and 4 
respectively if income tax report is to be made on the accrual basis. 

INVENTORY OF SHEEP. 

Inventories of sheep are made in a similar manner to those of hogs. 
Ordinarily there will be no depreciation allowed on sheep. 

INVENTORY OF POULTRY. 

Inventories of various classes of poultry are made annually. In the 

case of chickens, roosters may be listed separately from the hens of desired, if 
they have a special value for breeding purposes. 

Each class of poultry, such as chickens, turkeys, ducks, geese, guinea hens, 
etc., are listed separately and the values are based on market price less cost 
of delivering to market. 

Any poultry raised and sold or slaughtered during the year does not ap- 
pear in either inventory. 



SIMPLE FARM ACCOUNTS 
INVENTORY OF HOGS 



83 



Groups of animals 


Beginning year 


End of year 


Number 


Value 


Number 


Value 


Sows 

Boars 

Gilts 

Barrows 

Pigs 


/ 


■f 40 

s 40 


no 








Total 




00 












Col. 1 






Col. 2 



INVENTORY OF SHEEP 





Beginning year 


End of year 




Number 


Value 


Number 


Value 


Ewes 
Wethers 
Lambs 
Rams 




$ 






S 




Total 


















Col. 1 






Col. 2 





INVENTORY OF POULTRY 





Beginning year 


End of year 




Number 


Value 




Number 


Value 


Chickens 
Turkeys 
Ducks 
Geese 


75 
20 


$ 60 
4n 


00 
00 


75 
3 


$5S 
1 


00 
00 


Toti.l 




$105 


00 




S59 


00 






Col. 1 






Col. 2 





SIMPLE FARM ACCOUNTS 85 

INCOME TAX SUMMARY. 

Accrual Basis. 

At the end of the year's business the various accounts are added 
and the totals are transferred to this summary (page ST), if the 
income tax report is computed on the accural or inventory basis. As previ- 
ously pointed out (page S) any summary of business that does not con- 
sider inventories is likely to give inaccurate results. Only farmers who 
keep records by a recognized method may make income tax report.s on the 
accrual basis. 

Wheat, barley and millet are indicated in italics; these correspond to the 
accounts on page 39. As previously pointed out the requirements are that the 
three principal cash crops be recorded in separate accounts. Consequently, the 
headings of these accounts must be written in, in accordance with the character 
of the crop sales. On another farm the leading cash crops might be oats, pota- 
toes, and sweet clover, in which ease these crops would become the accounts 
on page 39 and the corresponding crop names would appear in the summary 
(page 87). 

It should be noted that the inventory values of the three leading cash 
crops are taken separately from the inventory for the beginning and end of the 
year (page 79). The values, $575.00 and $1120.00, (page 79) are added togethei- 
(there being no millet listed in the inventory) and the sum, deducted from the 
total of column 1 ($2,563), gives the amount, $S6S, which is the inventory value 
of "other crops," to be entered in column 1, page 87. Likewise the transfers 
from column 2, page 79, are made; however, there are no vaiues for barley 
and millet for the end of the year, so that $320.00 is deducted from the total, 
$1008.50, leaving the amount, $688.50. as the amount of the "other crops" to be 
transferred to page 87, column 4. 

The amount of "cash on hand" (page 79) is included with the value of 
"other crops" to be transferred. 

To illustrate how the transfers of the various accounts are made, observe 
the line on which "cattle" is found (page 87). The references in the narrow 
columns refer to the pages and columns from which the totals are brought 
forward; "81-1" refers to page 81, column 1, for cattle, the total of 
which is brought to column 1, page 87; the reference "41-1" refers to page 41 
column 1, from whence the total purchases are transferred to this summary; 
"41-2" refers to page 41, column 2, from whence the total sales of 
cattle are transferred and "81-2" refers to page 81, column 2, from whence 
the inventory value of cattle at the end of the year is derived. 

"Those who reported on the accrual basis last year should fill out this 
form. The gross profits are found by adding to the inventory values of live- 
stock and other products on hand at the end of the year (column 4), the 
amounts received from the sale of stock, and other products and miscellane- 
ous receipts (column 3) during the year, and deducting from this sum the in- 



86 SIMPLE FARM ACCOUNTS 

ventory values of stock and products on hand at the beginning of the year 
(column 1) plus the cost of stock and products purchased during the year 
(column 2)."* 

The totals of the four columns are carried to the lines on the lower 
half of the page as follows: — the total of column 4 is entered on line 1; total 
of column 3 is entered on line 2 ; the total of column 1 is entered on line 4 and 
the total of column 2 is entered on line 5. The amounts entered on lines 1 
and 2 are added, giving the total to be entered on line 3. The amounts entered 
on lines 4 and 5 are added, giving the total for line 6. The amount entered 
on line 6 is subtracted from the amount on line 3 and the result is "gross 
profit", entered on line 7. 

The entries to be made on lines 8 to 15 are found on the pages and in 
the columns indicated. A prerequisite of the accuracy of the entries is the 
correctness of the various accounts. 

The entries on lines 8 to 15 are added and the result is entered on line 
16. The amount of line 16 is subtracted from the entry on line 7; the result 
is "net farm profit" (line 17) for income tax reporting. After determining the 
net farm profit, foward this amount to page 93, line 6, where it is included 
in the summary for the study of the farm as a business. 

From the "net farm profit" (line 17) may be deducted the family exemp- 
tions ($1,000 for a single man, $2,500 for a married man, living with his wife, 
and $400 for each dependent child) and whatever remains is taxable income. 
If there is no income above family exemption, ordinarily the farmer will 
have no tax to pay, but if his gross profits (line 7) amount to $5,000 or more, 
he must make a report. 

Those who wish to report on the accrual basis but who reported on the 
"cash" basis previously, should fill out this form; however, they cannot enter 
as a credit on line 4 the total of column 1, unless the commodities reported in 
column 1 were actually bought, and provided they have not been charged as 
an expense in any previous year. 

If the change from the "cash" basis of reporting to the accrual basis re- 
sults in an abnormally large income for the year the change of method of re- 
porting is made, adjustments may be made to January 1, 1917, on sheets ob- 
tainable from the Commissioner of Internal Revenue. 

In the North Dakota Farmers' Account Book there are two identical forms 
for this report, one of which may be torn out and attached to the income tax 
report in lieu of the "work sheet" that farmers ordinarily have to make out 
The other form in the account book is retained for further reference and study. 

* North Dakota Farmers' Account Book, 1921. 



SIMPLE FARM ACCOUNTS 



INCOME TAX SUMMARY 

(Accrual basis) 





Inventory at 


Total 






Inventory at 




beginning year 


Purchases 


Total Sales 


end of year 




P-Col 


Amount 


P-Col 


Amount 


P-C;ol 


A mount 


P-Col 


Amount 


Wheat 


79-1 


S 675 


00 




S 




39- 


f 2783 


34 


79-2 


•S 320 


00 


Barley 


79-1 


1120 


00 








39- 


82 


•20 


79-2 






Millet 


79-1 












39- 


36 


00 


79-2 






Other Crops 


79-1 


868 


00 








39- 


14 


00 


79-2 


688 


50 


(Jattle 


81-1 


455 


00 


41-1 


175 


00 


41-2 


48 


48 


81-2 


810 


00 


Dairy Products 














43- 


271 


44 








Hog;s 


83-1 


40 


00 


41-1 






41-2 


111 


60 


83-2 






Horses 


81-1 


1130 


00 


45-1 






45-2 






81-2 


1020 


00 


Shee]i 


83-1 






45-1 






45-2 






83-2 






Poultry 


83-1 


105 


00 


47^1 






47-2 


43 


03 


83-2 


59 


00 


Eggs 














47- 


88 


83 








Misc. Receipts 















49- 


312 
S 3791 


^7 
09 








Total 


i 4293 


00 




t 175 


00 






S 2897 


50 






Col. 1 




Col. 2 




Col. 3 




Col. 4 



$2897.50 




3791.09 






86688.59 


4293.00 




175.00 






$4468.00 




$2220.59 



1. Inventor}' of livestock, crops, etc., at end of year, 
(Column 4 above) 

2. Sales of livestock, crops, etc., during the year, 
(Column 3 above) 

3. Total (Add amounts on line 1 & 2 above) 

4. Inventory of livestock, crojis, etc., at the beginning of the 
year, (Column 1 above) 

5. Cost of livestock, crops, etc., purchased during the j-ear 
(Column 2 above) 

6. Total (Add amounts on lines 4 & 5 above) 

7. Gross profits (Subtract amount on line 6 from amount on 
line 3 above) 

8. Expenses for feed bought (from j^age 51) 

9. Expenses for hired labor (from jiage 53) 
10. 

11. Expenses, miscellaneous (from page G9) 

12. Repairs on permanent improvements (from col. 2, page 07' 

13. Repairs on machinery (from column 2, page 57) 

14. Depreciation of farm property (from column 5, page 75) 

15. Depreciation of farm machinery (from col. 5, page 77) 

16. Total (add amounts on fines 8, 9, 10, 11, 12, 13, 14, 15) 

17. Net farm profit (subtract amount on line 1() from that on 
line 7 above) 



17.25 
136.20 

924.09 

8.00 

160.73 

55.00 

194.00 



$1495.27 
$ 725.32 



88 SIMPLE FARM ACCOUNTS 

INCOME TAX SUMMARY. 

Cash Receipts and Disbursements Basis. 

The summary for reporting taxable income on the "cash" basis is made 
up in the same manner as the summary on the accrual basis except that no 
inventory values for the beginning or end of the year appear in this sum- 
mary. Line 11 (opposite) shows an item that is not found in the summary 
on the accrual basis except as reflected in the inventories. To get the item, 
$110.00, the difference in value of horses, (page 81) at the beginning and end of 
the year is found. If there is a considerable number of colts raised their 
increase in value may entirely offset losses on the older horses in which case 
there will be no charge or entry to be made on line 11. 

A comparison of the net farm profit, $2185.82, on the "cash" basis with 
that on the accrual basis, $725.32, shows a difference of $1460.50. It is obvious 
that this farmer did not make a profit of $2185.82 because of the great differ- 
ence in inventory value (page 87, colimins 1 and 4) which in itself shows a 
loss of $1395.50. The same farm business is summarized in both cases by differ- 
ent methods. Unless the loss of $1395.50 is recognized a trufe statement of the 
year's business cannot be found. 

Another year may show an increase in inventory value due to increased 
production or advancing prices and here again the real income or gain is not 
determined unless these values are included in the summary. 



SIMPLE FARM ACCOUNTS 



89 



INCOME TAX SUMMARY 

(Cash receipts and exjienses basis) 







Amount 




Cost of 


Item 


P-Col. 


Received 


P-Col. 


Item if 










purchased 


Cattle 


41-S 


$ 48 


48 


41-1 






Dairy Products 


43 


271 


44 








Hogs 


41-2 


111 


60 


41-1 






Horses 


45-2 






45-1 






.Sheep 


45-2 






45-1 






Poultry 


47-2 


43 


03 


47-1 






Eggs 


47 


S8 


83 








Wheat 


39 


2783 


24 








Barley 


39 


82 


20 








Millet 


39 


36 


00 








Other Crops 


39 


14 


00 








Miscellaneous receipts 


49 


312 


27 








Total 




$3791 


09 












Column ] 






Column 2 



L Sales of livestock, crops, etc., during the year, 

(from column 1 above) $3791.09 

2. Cost of items sold if previously purchased, 
(from column 2 above) 

3. Gross profits (subtract amount on line 2 from amount 
on line 1 above) 

4. Expenses for feed purchased (from page 51) 17.25 

5. Expenses for hired labor (from page 53) 136.20 
(3. Expense, miscellaneous (from page 69) 924-09 
7. Repairs on permanent improvements (from page 07, column 2) 8.00 



S. Repairs on machinery (from page 57, cohunn 2) 

9. Depreciation of farm property (from i)age 75, column 5) 

10. Depreciation of farm machinery (from page 77, cohunn 5) 

11. Depreciation on work — and breeding — stock (from 
inventories, pages 81 and 83) 

12. Total (add amounts on lines 4 to 11, inclusive) 

13. Net farm profit (subtract amount on line 12 from that on 
line 3 above) 



160.73 

55.00 

194.00 

110.00 



$3791.09 



$1605.27 



$2185.82 



SIMPLE FARM ACCOUNTS 91 

A STUDY OF THE FARM BUSINESS, 

The best use that can be made of this summary (page 93) is to study the 
results of the farm operation for the year, to find out how much has been made 
to pay for the farmer's time and for the use of his invested capital. It is 
presented to assist in determining these two items and to point the way to 
improve the business. 

In order to determine the amount of the investment it is necessary to 
bring together the totals of the various invento ies and include the value of the 
real estate. 

Line 1 — In arriving at the value of land, including buildings, reference 
should be made to page 15 for a consideration of the elements that entei* 
into land values. Any mortgage that may be carried on the property is dis- 
regarded in determining this valuation. This farm of 350 acres is valued at 
$85.00 per acre or $29,750.00 including the improvements. 

Line 2 — To determine the present value of machinery the total amount of 
depreciation is deducted from the original cost, the total of column 6 being de- 
ducted from the total of column 2 on page 77. This amounts to $1137.10. 

Line 3 — The total value of all livestock at the beginning of the year is 
found by adding together the value of the various classes of stock in column 
1, page 87. For this farm the amount is $1,730.00. 

Line 4 — The value of feed, seed and supplies on hand at the beginning 
of the year is the total of column 1, page 79. and is $2,563.00. 

Line 5 — The total investment is found by adding the totals of the above 
values, and amounts to $35,180.10. 

Line 6 — The net farm profit is found on page 87, line 17 and amounts 
to $725.32. 

Line 7 — If any interest has been paid on farm mortgages during the year 
the amounts paid are recorded on page 69. In this case there was no 
mortgage. 

Line 8 — If there has been any marked improvement in the farm property 
during the year, such as the addition of windbreaks, land clearing, removal of 
stones, terracing, etc., such improvements are estimated and included here. 
There was none on this farm. 

Line 9 — The value of food, fuel and house rent furnished lo the family is 
found in the amount at the bottom of page 65. This is the total of the amount, 
less the amount deducted for hired labor, and is $356.80. 

Line 10 — This is the total of the above credits including the net farm profit 
and is $1082.22. 

Line 11 — The value of family labor is found on page 55. 

Line 12 — Occasionally there is a decrease in the physical valuation of 



92 SIMPLE FARM ACCOUNTS 

real estate due to excessive erosion, destruction of timber by storm, etc., al- 
though this is of infrequent occurrence in the Northwest. Any such loss that 
occurs is estimated and entered here. 

Line 13 — The cost of maintaining the dwelling house on the farm cannot 
be allowed as an expense for income tax purposes but is included in this 
summary. The depreciation of the dwelling is found in column 5 on page 

75. 

Line 14 — Likewise repairs to the dwelling are recorded here, the various 
items of cost for this purpose being found in the household and personal account 
(page 73) under running expenses, when there are any such expenses. 

Line 16 — The difference between all expenses and receipts, including dif- 
ferences in inventories, is the amount that the farm operator actually receives 
for his labor and management and for the use of his capital. For the farm 
here considered the amount is $876.22. 

Line 17 — Interest en the investment is allowed at the rate of 6 per cent. 
It may be claimed that this rate is too high or too low; this rate is merely 
suggested. The fact is that farmers generally make, on the average, only 
about 31/^ per cent, on their investments. For this farm the investment is 
$35,180.10 (line 5) ; interest on this investment at 6 per cent is $2110.80. 

Line 18 — If the interest on the investment is deducted from the income 
for labor and investment the result is the labor earning of tne operator. In 
the case here indicated the interest is greater than the income; in other words, 
the farmer received $1234.58 less than nothing for his year's work. 

Line 20 — The value of the operator's labor, irrespective of what his actual 
income is, has been discussed elsewhere (page 22). This value is estimated 
and entered here; for this farmer it is $1,200 per year. 

Line 21 — Where the value of the operator's labor is deducted from the 
income for labor and investment, the earnings on the investment are found. 
In the case of this record this return is less than nothing. 

Line 22 — When there are earnings on the investment, these are divided 
by the amount of the investment (line 5) and the result is percentage return on 
investment. 



SIMPLE FARM ACCOUNTS 
A 8TUDV OF THE FARM BUSINESS 



93 



Investment in the farm business 



Inventory 
beginning year 



1. Land, including buildings $29750.00 

2. Machinery (subtract total, column 6, from total, column 2, 

on page 77). 1137.10 

3. Livestock, (add totals of column 1 on pages 81 and S3). 1730.00 

4. Feed, seed and supplies (total of column 1, ])age 79) 2563.00 

5. Total capital investment (add amounts of lines 1,2,3 & 4 above) $35180.10 



6. Net farm profits (from line 17, page 87) $725.32 

7. Interest paid on farm mortgages (from page 69) 

8. Increased value on account of development 

9. Value of food, fuel and house rent (from page 65) 356.90 

10. Total (add amounts on lines 6, 7, 8 & 9) 1082.22 

11. Value family labor (from page 55; 174-00 

12. Decreased value of farm property 

13. Depreciation on dwelling (from column 5, page 75) 32.00 

14. Cost of repairs to dwelling (from page 73) 

15. Total (add amounts on lines 11 to 14 inclusive) 206.00 

16. Income for operator's labor and investment (subtract 

amount on line 15 from that on line 10) 876.22 

17. Interest on investment @ Q% (investment is line 5) 2110.80 

18. Labor earnings of operator (subtract amount of line 17 fi'om 

that of line 16) Loss 



19. Income for operator's labor and investment, (line 16 above) 

20. Value operator's labor (estimated) 

21. Income on investment (subtract amount line 20 from that 
of line 19) 

22. Interest on investment (divide amount of line 21 by the 
amount of line 5 above) 



$876.22 
1200.00 

Loss 

Loss % 



94 SIMPLE FARM ACCOUNTS 

SOME MEASURES OF FARM BUSINESS. 

It is desirable to have some standard by which any attainment may be 
measured and consequently the column "average for good farms" is shown on 
page 97. The figures indicated as measures in this column must be con- 
sidered as applying only in a general way because conditions are variable and 
some special situation may upset a fair comparison. Where the usual or com- 
mon prairie conditions prevail in the northwest the measures given are reason 
ably fair, representing just a little better than average conditions as determined 
by records of many farmers. 

The average "size of farm" in North Dakota, for example, is 480 acres. 
In the Red River Valley the size is generally somewhat less than this and 
farther west the size (in acres) is somewhat larger. Farms are larger in the 
west because very much less business is done per acre; that is, expense of 
operation is less per acre and production is likewise less, and therefore, more 
land is required to provide the necessary income to support a family (see page 
30). 

The acreage in "crops" for the farm here considered is found on page 
37. and compares with a considerably larger acreage where somewhat 
greater profits are made. 

The "amount of labor" is found by adding the months of lal)or hired, 
(page 53), family labor (page 55) and the operator's labot ror the year, 
which amounts to 15.4 months for the farm under consideration. This farm 
uses labor a little less efficiently than the average, since 24 months of labor 
are generally required to operate 400 acres of the usual crops. 

The "number of work horses" on this farm is seven (page 81) while 
10 horses are required for the larger farms. 

The "number of milch cows" on the farm was three for most of the year 
(page 81). The income per cow, below, indicates that this enterprise 
should be increased, which was actually done toward the end of the year. 

The "wheat yield per acre" is considerably below the average for good 
farms, being 10.5 bushels. Good farm practices do much to overcome drought 
and rust may largely be avoided by growing varieties that are highly resistant 
to this parasite. These are the two greatest causes of crop failure in the 
northwest. 

Yields of oats and barley (page 37) are much below the average, being 
14.5 bushels and S.25 bushels per acre, respectively. Drought was the prin- 
cipal cause of these low yields. 

The "flax yield per acre," on the other hand, was exceptionally good, due 
largely to seasonal conditions over which the farmer had little control. None 
but "wilt-resistant" varieties of flax should be grown. 

Corn and potatoes were not produced on the farm. However, it might 
be inferred from the good yield of other feed crops that corn should be in- 
cluded in the cropping system. There is no doubt, whatsoever, but that corn 
is an excellent crop to put the land in good condition for succeding grain crops. 



SIMPLE FARM ACCOUNTS 95 

The same is true of potatoes. Experience has shown, too, that a few acres of 
potatoes, produced consistently every year, are far more profitable, acre for 
acre, than grain. 

The "millet yield per acre" and also the yield of alfalfa (page 37) were 
exceptionally good, being far above the average. 

The "income from stock" is found as follows: — add together the inventory 
values of all stock at the beginning of the year (page 87, column 1) and 
the purchases of stock (page 87, column 2); add together the inventory 
values of all stock at the end of the year (page 87, column 4) and the sales 
of stock and stock products (page 87, column 3) ; subtract the sum of the 
"beginning" inventories and purchases from the sum of the "end" inventories 
and sales; the result is "income from stock". In comparison with the number 
of productive stock on the farm, it is apparent that this part of the farm busi- 
ness was profitable. 

The "cattle receipts per cow" are determined as follows: — add the value 
of cattle at the beginning of the year ($455) to the purchases, ($175); add the 
value of the cattle at the end of the year ($810) and the sales of cattle 
($48.48) and sales of dairy products ($271.44); the difference between these 
two sums is $499.92, which, divided by the number of cows (3), shows tne in- 
come per cow to be $166.64. Where feed can be produced as above indicated 
and such an income can be made there is no doubt but that an increase in this 
enterprise is justified. 

The income from the hogs, "hog receipts per sow," is found in the same 
manner as the cattle receipts per cow. The amount of business done with 
hogs was too small on which to base a conclusion. Howeve:-, some hogs in 
connection with dairy cattle are generally more profitable than where the 
cattle are handled by themselves. 

The "value of machinery per crop acre" is a measure of the operating 
and overhead efficiency of the farm. When the total of column 6 is deducted 
from the total of column 2 (page 77) and the result is divided by the num- 
ber of crop acres (227) it is seen that the present value of machinery, based 
on cost prices, is $5.01 for each acre in crops, which is somewhat higher than 
the average. This is due quite largely to the fact that the size of the farm 
is too small; a considerably increased acreage could be operated without in- 
creasing the amount of machinery in proportion. 

The "annual farm cost of automobile" is found by adding the depreciation 
(page 77, column 5), interest on the present farm value of the car at eight 
per cent., cost of gasoline and oil and cost of repairs for farm use (page 
59). Few cars are operated at an annual cost below that here indicated 

($178.57). 

"Crop acres per horse" are found by dividing the number of crop acres 
(page 37) by the number of work horses. The result on this farm is 32. t 



96 SIMPLE FARM ACCOUNTS 

acres which is considerably less than the average for similar farms. There 
are too many horses on this farm, or the size of the farm should be increased 
by purchase or lease. If this is not possible a more intensive cropping system 
might be put into operation. 

The "value of man labor per crop acre" is found by adding the value of 
hired labor, including board, ($136.20), value of family labor $(174) and the val- 
ue of the work done by the farmer himself (not including management), based 
on "going wages" ($900), and dividing the result by the number of crop acres 
(227). The result is $5.33, which is slightly higher than the establised 
average. , 

It should be remembered that machinery and hired labor were the highest 
in terms of money value in 1920 that they have ever been in the history of 
the country. Consequently, in comparing factors involving either of these 
items with standards of measurement, proper regard must be given to lower 
prices that may prevail. 



SIMPLE FARM ACCOUNTS 
SOME MEASURES OF FARM BUSINESS 



97 





This Farm 


Avera 
good 


ge for 
'arms 


Size of farm (acres) 


350 




480 


Crops, including tame hay (acres) 


227 




400 


Amount of labor, including operjitor (months) 


154 




24 


Number of work horses 


7 






Number milch cows 


3 




5-10 


Wheat yield per acre (bushels) 


10.5 




15 


Oats yield per acre (bushels) 


14.5 




40 


Barley yield per acre (bushels) 


8.25 




25 


Flax yield per acre (bushels) 


13. 




10 


Corn yield ])er acre (bushels) 






35 


Potato yield per acre (bushels) 






100 


Millet yield per acre (tons) 


3 




2 


(Jther tame hay yieUI per aci'e (tons) 


3 




1.5 


Income from stock 


$547.38 


$1 


500.00 


Cattle receipts per cow- 


S16'h'.b'4 


$ 


150.00 


Hog receipts per sow 


S 71.6X1 


S 


50.00 


Value machinery per crop acre 


■$ 5.01 


$ 


4.50 


Annual farm cost of automobile 


$178.57 


s 


240.00 


Number crop acres per horse 


32.4 




40 


Value of man labor per crop acre 


$ 5.33 


s 


5.00 



9S SIMPLE FARM ACCOUNTS 



TEACHERS' SUPPLEMENT 

The following record of expenses and receipts consists of the cash trans- 
actions that have been encountered in the various accounts previously con- 
sidered. These entries are here arranged in chronological order for class- 
room use in order that the work can be given in a manner similar to the way 
the transactions actually occur on the farm. 

After the depreciation accounts of buildings and machinery are com- 
pleted in the Farmers' Account Book, the records on pages 75 and 77 having 
been entered, the inventories for the beginning of the year are recorded. 
Then the cash transactions, following, are given to the pupils for each lesson, 
in quantities sufficient for them to enter in the proper account. After all 
the cash transactions have been recorded in the accounts, the inventories for 
the end of the year are entered. The various summaries are then made up, 
similar to those presented previously. The various measures of efficiency 
(page 95) are then calculated from the record that has been here presented. 
The pupils should be supplied with blank copies of the Farmers' Account Book 
for the practice work. 

Following this practice the pupil is ready to begin the keeping of the farm 
record on his home farm, using the same procedure as in the practice work. 



SIMPLE FARM ACCOUNTS 



93 



DATE 


Jan. 


5, 


Jan. 


5, 


Jan. 


5, 


Jan. 


5, 


Jan. 


5, 


Jan. 


5. 


Jan. 


5, 


Jan. 


15, 


Jan. 


15, 


Jan. 


15, 


Jan. 


31, 


Jan. 


31, 


Feb. 


29, 


Feb. 


29, 


Feb. 


29, 


Mch. 


1, 


Mch. 


10, 


Mch. 


10, 


Mch. 


10. 


Mch. 


10, 


Mch. 


10, 


Mch. 


10, 


Mch. 


15, 


Mch. 


20, 


Mch. 


20, 


Mch. 


25, 


Mch. 


30, 


Mch. 


31, 


Mch. 


31. 


Mch. 


31. 


Apr. 


1, 


Apr. 


5, 


Apr. 


5, 


Apr. 


5, 


Apr. 


5, 


Apr. 


16, 


Apr. 


19, 


Apr. 


19, 


Apr. 


30, 


Apr. 


30, 


Apr. 


30. 



$ 35.55 

7.84 

22.25 

5.72 



145.75 
1.75 

30.00 



CASH RECEIPTS AND EXPENSES. 

ITEMS EXPENSES RECEIPTS 

1 pr. shoes 4.00 

3 games riimm.v -30 

Candy and cigars -35 

2 sacks flour $ 12.00 

20 pounds sugar 4.00 

6 pounds coffee ISO 

6 qts. canned fruit 2.10 

Cinnamon, vanilla, cloves -75 

Corn starch -50 

Yeast -20 

73 pounds butter (January 1 — 31) 

16 doz. eggs 

45 pounds butter (Feb. 1—29) 

11 doz. eggs (Feb. 1—29) 

Groceries (Feb. 1—29) 22.25 

Feed for poultry 3.25 

53 bu. wheat @ $2.75 

1 rooster 

15 turkeys C" $2.U0 

6 gal. gas for auto 1-92 

5 gal. oil for auto 4.50 

Taxes 123.29 

i/^-ton bran for cows 14.00 

1 spark plug 1.00 

1 tire 18.00 

8 gal. gas for auto 2.56 

Tightening rods (auto) 6.50 

23 pounds butter (Mch. 1—31) 11.15 

5 doz. eggs (Mch. 1—31) 1.90 

Cxroceries (Mch. 1—31) 21.65 

Sharpening plow lays 5.00 

1 teakettle 2.50 

1 ton coal 14.00 

Wash woman 5.00 

50 gal. gas for auto 15.00 

1 roll roofing 2.00 

Drill repairs .25 

Post auger 2.50 

25 pounds butter (April 1—30) 12.00 

10 pounds butter (trade for groceries) 5.00 

Groceries (Apr. 1—30) 25.25 



100 



SIMPLE FARM ACCOUNTS 



DATE 


May 


31, 


May 


31, 


May 


31. 


June 


5, 


June 


10, 


June 


15. 


June 


15, 


June 


15, 


June 


15, 


June 


15, 


June 


15, 


June 


15, 


June 


19, 


June 


19, 


June 


25, 


June 


25, 


June 


25, 


June 


28, 


June 


29, 


June 


29, 


June 


30, 


June 


30, 


July 


1, 


July 


5, 


July 


5, 


July 


31, 


July 


31, 


July 


31, 


Aug. 


3, 


Aug. 


10, 


Aug. 


15, 


Aug. 


31, 


Aug. 


31, 


Sept. 


3, 


Sept. 


3, 


Sept. 


3, 


Sept. 


3, 


Sept. 


4, 


Sept. 


6, 


Sept. 


6, 


Sept. 


6, 



ITEMS EXPENSES 

15 pounds butter (May 1 — 31) 

17 doz. eggs (May 1—31) 

Groceries 24.80 

Bolts and parts (auto) 1.50 

Hay carrier $ 30.00 

6 loads sand 

Road work 

Testing 3 cows 10.00 

Phone rent, 1 year 18.00 

Fire insurance 25.88 

Millet seed 20.25 

Freight on seed .95 

Tires set on wagon 6.00 

Clevises and bolts 8.50 

Scrap iron 

Repairs for rake 3.65 

Parts for mower 7.20 

John Olson, 8 days labor 26.00 

Dakota Farmer, 5 yrs. subscription 3.00 

Expenses to Fargo account farm business 17.00 

20 pounds butter (June 1 — 30) 

20 doz. eggs (June 1—30) 

Repairs on cultivator 1.65 

50 gal. gas 15.50 

5 gal. oil .5.00 

IS pounds butter (July 1 — 31) 

211/2 doz. eggs (July 1—31) 

Groceries (July 1—31) 23.70 

Canvases for binder 30.05 

50 gals, gas for auto 15.50 

7 gal. gas for auto 2.31 

11 doz. eggs (Aug. 1 — 31) 

Groceries (Aug. 1—31) 41.40 

Harness repair 19.75 

Repairs on grain tank 8.10 

65 bu. wheat @ $2.30 

Evener 1.60 

135 bu. wheat @ $2.25 

142 bu. wheat @ $2.28 

Team and wagon threshing 

Lumber for poultry house 149.00 



RECEIPTS 
6.75 
6.29 



$ 6.00 
39.10 



10.00 



8.00 
7.20 



8.64 
8.60 



4.95 



149. .50 

303.75 
323.76 

78.00 



SIMPLE FARM ACCOUNTS 101 

DATE ITEMS EXPENSES RECEIPTS 

Spet. 6, Hardware for pouiltry house 15.00 

Sept. 6, Farm Bureau membership 10.00 

Sept. 6, Twine 106.00 

Sept. 6, Thresh bill 525.00 

Sept. 7, 133 bu. wheat @ $2.30 305.90 

Sept. S, 145 bu. wheat @ $2.28 330.60 

Sept. 9, 1371/2 bu. wheat @ $2.24 308.00 

Sept. 10, 141 bu. wheat @ $2.22 313.02 

Sept. 13, 135 bu. wheat @ $2.23 301.05 

Sept. 14, 133 bu. wheat (a) $2.27 301.91 

Sept. 15, 75 bu. barley @ 60c 45.00 

Sept. 15. 3 tons millet @ $12. 36.00 

Sept. 16, 60 bu. barley @ 62c 37.20 

Sept. 16, 10 bu. flax @ $1.40 14.00 

Sept. 17, Geo. Jones, 18 days labor 102.20 

Sept. IS, Church donation 10.00 

Sept. 30, Political contribution 18.00 

Sept. 30, 280 qts. milk (Sept. 1—30) 28.00 

Sept. 30, 23 doz. eggs 9-66 

Sept. 30, Groceries (Sept. 1—30) 26.50 

Oct. 1, Interest on note 8.00 

Oct. 1, Horseshoeing 10.00 

Oct. 6, Lumber for repairs 6.00 

Oct. 7, Pasturing 3 horses 12.00 

Oct. 11, Repairs on gas engine 3.68 

Oct. 11, 1 shovel 2.30 

Oct. 11, 1 hammer 1.25 

Oct. 15, 1 hide 3.67 

Oct. 15, Sharpening plow lays 4.50 

Oct. 31, 420 qts. milk (Oct. 1—31) 42.00 

Oct. 31, 24 doz. eggs 1200 

Oct. 31, Groceries (Oct. 1—31) 23.20 

Nov. 16, 5 hogs, 930 lbs. rgi 30c 111.60 

Nov. 20, 3 doz. chickens 11-28 

Nov. 30, 515 qts. milk (Nov. 1—30) 51.50 

Nov. 30, 21 doz. eggs 10.92 

Nov. 30, Groceries (Nov. 1—30) 22.30 

Dec. 1, 1 heifer (meat) 48.48 

Dec. 2, 1 buill calf 50.00 

Dec. 2, 1 cow 125.00 

Dec. 10, Light sleigh 25.00 

Dec. 10. To John (cash) 25.00 

Dec. 10, Phonograph records ^ 3.00 



102 SIMPLE FARM ACCOUNTS 

ITEMS EXPENSES RECEIPTS 

Hauling school bus, 3 mos. _. $150.00 

Services on school board 13.50 

406 qts. milk (Dec. 1—31) 40.'o0 

25 doz. eggs (Dec. 1—31) 13.75 

Groceries (Dec. 1—31) 21.75 



DATE 


Dec. 


15, 


Dec. 


31, 


Dec. 


31, 


Dec. 


31, 


Dec. 


31, 



103 

INDEX 

Page 

Acreage and yield of crops 3g 

Appreciation g 

Automobile, cost 32 53 95 

Expense •].§ 

Illustrated 55 

For pleasure Y2 

Bills payable 22 

Illustrated YO 

Bills receivable 25 

Illustrated YO 

Board for labor 52 

I'uilding repairs ig 



Illustrated 



6<5 



Depreciation, Illustrated ^ 74 

Capital investments, classified I3 

Defined 9 

Personal property 13 

Real Estate 1^5 

Cattle, purchases and sales illusti-ated 40 

Receipts, per cow 95 

Sales 24 40 

Cash required to operate I5 

Illustrated 78 

Crop, acres per horse 9, 30, 95 

Crop sales 24 

Illustrated 74 

Dairy product sales 25 

Illustrated 42 

Depreciation 1q 

Buildings 20 

Illustrated 74 

Dwelling 21, 74, 92 

Machinery 21 

Illustrated 76 

Pure bred stock 16 

Efficiency measures , 14, 30 

Illustrated 94 

Egg sales 25 

Illustrated 46 

Enterprise, defined 10 

Expenses, automobile, defined IS 

Building repairs, defined 18 

Classified 17 



104 INDEX 

Expenses (continued) Page 

Depreciation of buildings 20 

Machinery 21 

Groceries, defined 19 

Hired labor defined 17 

Household and personal, defined 22 

Machinery, defined 17 

Miscellaneous, defined 19 

Overhead, defined 11 

Family labor 10, 21 

iriustrated 54 

Farm Accounts, purpose of 9 

Accepted methods 33 

Classified 13 

Farm, area 36 

Business analysis summary defined 2S 

Illustrated 91 

Operator 10 

Plat 34 

Price method of valuation 10 

Farming, a family business 30 

Farmstead 10 

Feed bought 17 

Illustrated 50 

Food, fuel and house rent 26 

Illustrated 64 

Groceries 10, 19 

Expenses illustrated 62 

Gross profits 10, 87 

Hired labor 17 

Hogs, purchases and sales illustrated 40 

Receipts per sow 95 

Sales 25 

Horse, 'labor 1« 

Work, value 1*5 

Depreciation 80 

Purchases and sales illustrated 44 

Sales ^ 25 

Household and personal account 22 

Illustrated 72 

House rent 64 

Improvements, permanent, defined 12 

Income from stock 31 

Interest on farm mortgage 28 



INDEX 105 

Interest (continued) Page 

On investment 11 

Inventory, defined 11 

Cattle, Illustrated 80 

Feed, seed and supplies, illustrated 78 

Hogs, illustrated 82 

Horses, illustrated 80 

Poultry, illustrated 82 

Sheep, illustrated 82 

Investment, interest on 11 

How determined 29 

I-abor, cost 32 

Earnings of operator 11 

Expenses, illustrated 52 

Hired 17 

Management, defined 11 

Machinery, depreciation based on cost -_ 16 

Expenses, illustrated 56 

Man labor, defined 11 

Measures of efficiency 14, 30, 94 

Method of valuation, farm price 10 

Miscellaneous expenses 19 

Illustrated 68 

Miscellaneous receipts, illustrated 48 

Net farm profit 11 

Nurse crop 11 

Operator's labor 22 

Operator's earnings defined 11 

Overhead expenses . 11 

Permanent improvements 12 

Personal expenses, illustrated 72 

Personal property 15 

Poultry, purchases and sales, illustrated 46 

Sales 25 

Profits, gross, defined . 10 

Pure bred stock, valuation and depreciation 16 

Real estate 15 

Receipts, per cow, defined 12 

From cattle sales, defined 24 

Illustrated 40 

From crop sales, defined 24 

Illustrated 38 

From dairy product sales, defined 25 

Illustrated 42 

From egg sales, defined 25 



106 INDEX 

Page 

Receipts from Egg sales, Illustrated 46 

From hog sales, defined 25 

Illustrated 40 

From horse sales, defined 25 

Illustrated 44 

From poultry sales, defined 25 

Illustrated 46 

From sheep sa'les, defined 25 

Illustrated 44 

Miscellaneous, defined 28 

Illustrated 48 

Repairs, Building __ 66 

Dwelling 72 

Machinery 56 

Sheep, purchases and sales, illustrated __ 44 

Sales 25 

Size of business 12, 30 

Summaries, classified 27 

Farm business analysis, illustrated 91 

Income tax, accrual basis, illustrated 85 

"Cash" basis, illustrated 88 

Taxable year 12 

Teacher's supplement 98 

Threshing 18, 60 

Outside of farm 48 

Joint operation of rig 60 

Tractor expense 17 

Tllustrated . 58 

Trade of products 42, 46 

Work horses, value 16 

Yield, per acre -_ 81 



